Bond Market Signals Rising Inflation Worries Ahead of New Fed Chair

ISM services index jumps, crypto stocks rally after Trump comments

Published on Mar. 4, 2026

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The bond market is signaling rising inflation worries ahead of Kevin Warsh's expected appointment as the new Federal Reserve chair. This comes as the ISM services index jumped to a three-year high and crypto-linked stocks rallied after President Trump urged banks to work with the crypto industry.

Why it matters

Warsh's first months as Fed chair could be complicated by rising inflation concerns stemming from geopolitical tensions and their impact on oil prices. The strong ISM services data suggests the economy remains resilient, but the bond market is pricing in more rate hikes than previously expected, posing challenges for the incoming Fed leadership.

The details

Fed funds futures now show a 60% chance rates stay unchanged after Warsh's inaugural meeting, up from 54% a week ago and 42% a month ago. Two quarter-point cuts are still priced in by year-end, though the odds have dipped to around 60%. The ISM Services Index jumped to 56.1 in February, the highest level in more than three years and marking the 20th-straight month of expansion. Crypto exchange names like Coinbase and Galaxy Digital rallied after Trump urged banks to 'make a good deal' with the crypto industry to advance stalled legislation.

  • The White House may want lower fed funds rates, but the bond market is signaling rising inflation worries after the attacks on Iran and the surge in oil prices.
  • Trump has said the conflict could last four to five weeks.
  • That leaves a couple of months for things to normalize before Warsh's first meeting — though Polymarket odds currently predict a cessation of hostilities by the end of June.

The players

Kevin Warsh

The expected incoming Federal Reserve chair.

Neel Kashkari

Minneapolis Fed President, who said it's 'too soon to know' what impact a war with Iran might have on inflation or how long any effects could last.

Donald Trump

The President of the United States, who urged banks to 'make a good deal' with the crypto industry to advance stalled legislation.

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What they’re saying

“Coming into this moment, I was feeling pretty good. I felt like policy was in a pretty good place.”

— Neel Kashkari, Minneapolis Fed President (Wall Street Breakfast)

What’s next

The judge in the case will decide on Tuesday whether or not to allow Walker Reed Quinn out on bail.

The takeaway

This case highlights growing concerns in the community about repeat offenders released on bail, raising questions about bail reform, public safety on SF streets, and if any special laws to govern autonomous vehicles in residential and commercial areas.