Warsh: Surprise is Not Our Goal as Treasury Yields Fall

Fed Chair Kevin Warsh emphasized that the goal of the Federal Reserve is not to surprise the market, but rather to make informed decisions based on economic data. This was evident in their latest rate decision, which saw Treasury yields falling after the announcement.

According to Warsh, the Fed's review of the economic situation was 'rigorous' and focused on understanding underlying inflation dynamics amid shocks. He noted that potential shocks in the economy would be closely monitored and addressed as needed with the tools available.

The 10-year Treasury yield is only up by two basis points after being up by nearly five basis points earlier in the day, indicating a positive market reaction to the Fed's decision. CME FedWatch now puts the chances of a hold in September at over 40%, up from 24% yesterday.

Warsh emphasized that the Fed will continue to watch potential shocks in the economy and use its tools as needed to deal with them. He also mentioned that the market reacting to what is actually happening rather than leaning on Federal Reserve guidance was a positive development.