Treasury Secretary Scott Bessent and Federal Reserve Chairman Kevin Warsh face mounting pressure from bond investors concerned about inflation and federal deficits. On Wednesday, the Fed is expected to raise its benchmark lending rate for the first time in three years, with futures traders pricing in a quarter-point increase to push inflation toward the 2 percent target. Analysts view this as a credibility test for Warsh, who must signal whether further hikes will follow. Wall Street economists forecast two rate increases this year, and anything less risks renewed bond market turmoil. The decision could anger President Trump, who has urged rate cuts.

Meanwhile, Bessent testified before the House Financial Services Committee as a key borrowing rate hit a 19-year high. He defended the Treasury's multibillion-dollar bond buyback plan, arguing yields might have been higher without intervention. Bessent also endorsed Trump's proposal to send $5,000 checks to American adults if Republicans win the midterms, a plan that could cost over $1 trillion. He suggested the dividends could proceed without congressional approval and without affecting the deficit, though offered no funding details. Judy Shelton, Trump's former Fed nominee, was spotted in the gallery and has since joined Treasury as a counselor to Bessent.