On July 2, 2026, Federal Reserve Chair Kevin Warsh made comments during a European Central Bank forum in Portugal that impacted financial markets. He noted a decrease in inflation expectations and risks, which led to a brief revival in a popular trading strategy, despite his assertion of a commitment to price stability. This reaction was highlighted by strategists from Deutsche Bank.

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Warsh’s throwaway comment injects life into the debasement trade, for one day at least

July 2, 2026, 5:08 a.m. ET

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Federal Reserve Chair Kevin Warsh, at least for a day, revived a popular trade.Photo: Brendan Smialowski/Agence France-Presse/Getty Images

As much as new Fed Chair Kevin Warsh tried to refrain from steering markets, it looks like he did.

At a European Central Bank forum in Sintra, Portugal, on Wednesday, Warsh said inflation expectations and inflation risks have come down over the last four weeks. “Markets latched onto his comment that ‘inflation risks have come down,’ even as he reiterated his commitment to price stability,” said strategists at Deutsche Bank, led by Henry Allen.

About the Author

Steve Goldstein

Steven Goldstein is based in London and responsible for MarketWatch's coverage of financial markets in Europe, with a particular focus on global macro and commodities. Previously, he was Washington bureau chief, directing MarketWatch's economic, political and regulatory coverage. Follow Steve on Twitter: @MKTWgoldstein.

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