Fed's 'Say Nothing' Strategy Rattles Bond Markets Under Warsh

The US Federal Reserve's new 'say nothing' strategy under Chairman Kevin Warsh is testing markets, with some critics arguing that it lacks forward guidance.

Since Warsh took over in May, bond markets have been rattled by the lack of forecasts for the Fed's June macro projections and a dramatic reduction in the length of monetary policy statements.

The 30-year US Treasury yields are now trading around 5.2%, up from about 20 basis points since Warsh assumed the chairmanship.

Warsh has committed to achieving price stability, but his long-term strategy is unlikely to be fully fleshed out until the conclusion of five taskforces he has set up to evaluate the Fed's communications, balance sheet policies, data sources, productivity, and inflation framework.

These taskforces may not report until end-2026 or early 2027, at which point Warsh could use their findings as cover to remake an institution that has failed to hit its 2% inflation target for five years.