Kevin Warsh will be sworn in Friday morning as Federal Reserve chair, stepping into the role as inflation rises and bond markets increasingly signal a potential rate hike. While President Trump picked Warsh expecting lower rates, investors are bracing for the opposite as energy-driven inflation and higher yields complicate the policy outlook and test the Fed's independence early in his tenure.

Join market leaders in Toronto to explore the forces shaping today's financial landscape. Gain insights into tariffs, trade and alpha in the CUSMA era.

US Treasury yields fell as oil prices retreated on optimism that an agreement to end the US war in the Middle East might be reached soon. The 10-year note's yield neared 4.55%, extending its decline from over 4.68% two days ago. "The extent to which rates move higher will ultimately depend on how long the Iran conflict persists," said TD Securities head of US rates strategy Gennadiy Goldberg.

JPMorgan Chase is in talks to transfer risk on more than $4 billion in net asset value loans to private equity funds as part of a strategy to reduce exposure to an industry facing a downturn. The deal would allow JPMorgan to keep the loans on its books while investors take on up to 12.5% of potential losses. Mitsubishi UFJ Financial Group is pursuing a similar risk transfer involving loans to private credit funds.

Private credit managers are increasingly trading loans to manage liquidity, shed troubled exposures and pursue discounted assets as the $1.8 trillion market faces its first major stress test. Secondary trading volumes are on pace to more than double last year's record, signaling a shift away from the industry's traditionally buy-and-hold approach.

The Federal Reserve has proposed a framework for "skinny" payment accounts for nonbanks, allowing access to Fedwire and other services but excluding the automated clearing house. The proposal includes a $1 billion cap on closing balances and suggests Reserve Banks pause decisions on Tier 3 institutions' access requests until the policy is finalized. The proposal is open for public comment for 60 days.

The US has opted to bolster dollar dominance by embracing private digital dollars and stablecoins through the GENIUS Act, which creates a regulatory framework for payment stablecoins and positions the Treasury Department to write rules. This approach aims to modernize payments and generate demand for US Treasurys, with stablecoin transaction volume hitting a record $33 trillion in 2025.

The Government Finance Officers Association and the Securities Industry and Financial Markets Association are focusing on transportation and water infrastructure in their federal legislative agendas. GFOA is urging Congress to address the expiration of surface transportation authorization and water investments from the Infrastructure Investment and Jobs Act, both set to expire Sept. 30. SIFMA is advocating for the Local Infrastructure Financing Tools Act, which would reintroduce advance refunding of municipal bonds on a taxable basis and introduce a tax credit bond program.