Warsh’s Fed Retreats From Market Hand-Holding as Wall Street Braces for Volatility
Federal Reserve Chair Kevin Warsh is intentionally reducing explicit forward guidance, pushing markets to price risk independently and potentially increasing volatility.
- Federal Reserve Kevin Warsh implemented measures reversing decades of transparency, criticizing the Fed's "dot plot" and telling markets to "play the ball, not the referee" rather than seeking policy cues.
- The Treasury Department faces $1.3 trillion in annual debt financing costs while managing $31.1 trillion in outstanding Treasury debt, with officials warning the government "literally can't afford a spike in yields."
- Treasury Secretary Scott Bessent described the approach as a "detox" on Tuesday, while Fed President Anna Paulson noted "it's healthy to have a good discussion about that." The Dow Jones Industrial Average added about 3,500 points, or 7%, since Warsh took office.
- George Catrambone of DWS Group warned "certainly, it's going to increase volatility," while Komal Sri-Kumar of Sri-Kumar Global Strategies stated "bondholders are not babies trying to have their hands held."
- Warsh maintains flexibility to call emergency meetings, saying "I don't think there's any magic number" for scheduled updates, and plans to address the Fed's agenda at Jackson Hole, Wyoming, at the end of August.
17 Articles
17 Articles
Breitbart Business Digest: Warsh Is Right About the Costs of Too Much Fed Talk
The reaction function fundamentalists think Warsh is abandoning monetary theory. In reality, he appears to understand a part of it they have forgotten. The post Breitbart Business Digest: Warsh Is Right About the Costs of Too Much Fed Talk appeared first on Breitbart.
An economist says Kevin Warsh is right to nix Fed guidance, and flags one thing he can do to calm markets
Photo 1 by Victor J. Blue/Bloomberg via Getty Images; Photo 2 by Al Drago/Bloomberg via Getty ImagesApollo economist Torsten Sløk said Kevin Warsh is right to nix forward guidance from the Fed. He said it gives the Fed flexibility, though at the cost of greater volatility in markets. Sløk says there's one thing Warsh can do to help quell bouts of volatility in reaction to Fed decisions. The market may have freaked out after the last Fed meeting,…
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