DoubleLine’s Sherman: Fed Must Hike Rates to Convince Bond Market

Sherman's argument inverts the usual easing trade: a bond market pricing a hike, not a cut, leaves the Fed's credibility as the variable rather than the direction of policy. The reference to Warsh as the messenger signals that the debate is now about who can restore that credibility, not whether tighter conditions are warranted. Whether officials validate or defy market pricing is the open question, and the reaction in long-dated yields is where that judgment will show up first.