No Put, No Cushion
The Beacon · June 24, 2026
The short version
The Fed flipped. On June 17 the dot plot moved to a hiking bias, the 2026 median fed funds projection went from 3.4% to 3.8%, and 9 of 18 officials now pencil at least one hike by year-end. The 2026 core PCE forecast was raised from 2.7% to 3.3%. With CPI already at 4.2%, this is a Fed that has stopped pretending the last mile is the problem.
Risk markets have not finished repricing. High-yield spreads sit near cycle tights around 265bps, equities are roughly 6.6% above their 200-day, and the VIX only crossed 20 today. The dots say hikes. The tape is still trading cuts.
The cracks are showing up exactly where they always show up first. Gold fell about 3% and bitcoin about 5% today, extending slides that have run for months, while high-yield credit did not budge. The assets that move first when real yields rise are already moving. Credit is the last domino standing.
Core PCE for May releases tomorrow, June 25, 8:30am ET. That is the test. A hot print confirms the Fed’s 3.3% fear and the repricing accelerates. A soft one buys the complacency a reprieve into the tariff cliff and the energy bid.
This is the follow-through to our June 15 Beacon, The Fed Put, Retired. The regime call was the easy part. Watching the market argue with it in real time is the trade.
The Setup
Ten days ago we wrote that the Fed put was gone. Not weakened. Gone. A Warsh-led Fed walked into its first meeting on June 17 and did the thing the market had spent all of 2025 betting it would never do. It flipped the dots toward hikes and it raised its own inflation forecast at the same time.
Here is the part that matters. The market mostly nodded, repriced the front end of the curve, and then went back to pricing risk assets for a soft landing it no longer has any reason to expect. The 2-year Treasury yield jumped to its highest level in over a year. The short end believes the Fed. Equities, credit, and the rest of the risk complex are still arguing.
That gap is the whole piece. When the people closest to the policy rate believe one thing and the people pricing risk premia believe another, somebody is wrong. And in our experience credit is usually the slow one to admit it, not the right one.
Today sharpened a signal that has been building for weeks. Gold down about 3% on the session, and now off more than 25% from its highs. Bitcoin down about 5%, off more than 20% over three months, while the S&P sat near its own. The VIX woke up and crossed 20 for the first time in a while. And through all of it, high-yield spreads did not move. Equities, gold, and crypto lower together with volatility up is the signature of real-yield and liquidity tightening, not a sector rotation. A rotation moves money between assets. This drained it from several at once.
