First Thing: New Fed chair Kevin Warsh faces early test amid bond market worries

The new US Federal Reserve chair, Kevin Warsh, faces a critical test this week amid anxiety in government bond markets over inflation and Donald Trump’s tax and spending plans. As the world’s most powerful central bank prepares for its annual Jackson Hole conference, analysts said bond traders would be looking for signals from Warsh over its commitment to fighting inflation. However, Warsh has signalled reluctance to use his speech on Friday for the “more traditional setup” of dropping hints over how the US central bank may respond to inflationary pressures when its officials next meet to set interest rates in September and December.

Instead, he has said his Jackson Hole speech could be “focused on bigger questions”, including concerns over productivity and demographics. Why is this a crucial moment for the Fed? The gathering of the world’s most powerful central bankers in the Grand Teton national park is a blue riband event in the financial calendar.

However, the meeting comes as selling pressure intensifies in the $30tn US government debt market despite efforts by the Treasury secretary, Scott Bessent, to assuage investor worries after he committed to at least double Washington’s purchases of US Treasury bonds. The father of a US sailor onboard the USS Abraham Lincoln ⁠aircraft carrier deployed in the Middle East during the Iran war has been taken into federal immigration detention, the sailor ⁠said. The border ​patrol arrested Luis Manuel Aviles Roa, originally from Nicaragua, after conducting a vehicle stop in Key West, Florida, a spokesperson for the US homeland security department said on Sunday.

What did Joshua Aviles say about his father’s arrest? I just got a call that my dad ‌was taken by ICE. We have done everything through immigration to get his green card approved, and we are just waiting.

This is heartbreaking for me. I don’t know how I can mentally continue working 12+ hour days ‌knowing that my dad is somewhere, possibly being treated like a criminal.” How did the DHS respond? The DHS said Luis Manuel Aviles Roa ​entered the US illegally and would remain in immigration and customs enforcement detention pending removal proceedings.

A series of moves by Donald Trump’s administration to sow doubt in the integrity of US elections has intensified concern among voting experts – and sparked hope among election deniers – that it could declare a national emergency. Trump used a primetime television address in July to claim – again – that US elections were vulnerable to foreign manipulation, and repeat the lie that the 2020 presidential election, which he lost to Joe Biden, was stolen. While Trump and his allies could try to use a national emergency declaration to delegitimize results of November’s results, experts say such a declaration would not supersede the constitutional restrictions on executive power on election administration.