Warsh Warns Bond Investors to Focus on Economic Data Over Central-Bank Commentary

Federal Reserve Chairman Kevin Warsh has been urging bond investors to focus on changes in the US economy rather than central-bank commentary. According to Bloomberg, his appearances continue to move Treasury markets.

Since becoming chairman in May, Warsh's appearances have led to three of the largest daily moves in the US Treasury yield curve. The most recent instance was on Friday, when the gap between two-year and 30-year yields narrowed by 10 basis points as traders increased bets on interest-rate hikes.

Warsh has described the feedback loop between markets and Fed officials as a 'hall-of-mirrors problem.' He has encouraged investors to focus on economic data rather than trying to anticipate policymakers' remarks. In his latest appearance, he also warned that inflation was not meaningfully slowing and said policymakers still had work to do.

After Warsh's July appearance, the yield curve steepened by the most since August 2025. Investors expressed disappointment with his explanation for why the Fed left rates unchanged. Fixed-income managers warned of further volatility due to the Fed's reduced communication.