Warsh Ends Fed Put, Leaves Investors to Navigate Uncertainty

Kevin Warsh, the new Federal Reserve Chairman, has made it clear that he intends to end what's known as the 'Fed put.' The Fed put refers to a situation where the central bank provides guidance to investors and companies, making them believe that they will step in to save the market if trouble arises. This was particularly evident during the Great Recession.

The 2% inflation target proposed by Warsh is deliberately limited, and there are no hints about what might happen next. In the past, the Fed provided guidance to investors, but now Warsh has taken away that support, forcing them to figure things out on their own.

This shift has led to rising bond yields without any intervention from the Federal Reserve. The lack of direction from the Fed means that rates can move in either direction, and there will likely be times when they fall as well as rise.