The Federal Reserve, now under Chair Kevin Warsh, kept its benchmark rate unchanged at its first meeting under new leadership but penciled in one additional rate hike before year-end, suggesting a more hawkish posture than markets may have priced. Warsh, known for his hawkish leanings, framing this hold-with-hike-bias as a credibility signal — reinforcing the Fed's commitment to fighting inflation even as growth signals remain mixed.

The second-order setup is in rate-sensitive sectors: utilities, REITs, and long-duration tech could face valuation compression if the market re-prices the terminal rate higher. Watch the 2-year Treasury yield and the dollar index as near-term signal — a sustained move higher in both would confirm the hawkish re-pricing is underway and could pressure equity multiples heading into Q3.