Warsh's First Press Conference Fails to Impress Markets

Kevin Warsh's first press conference as Fed chair was met with harsh criticism after he failed to provide clear guidance on interest rates. Market commentators pointed out that his comments may have contributed to a steep increase in bond yields, dubbed a 'moron steepener' by some analysts.

The MOVE index, which measures the yield volatility of US bonds, has risen to its highest level in over 10 weeks. This indicates that investors are increasingly concerned about inflation and the Fed's ability to manage it under Warsh's leadership.

Some analysts have warned that Warsh's determination to avoid forward guidance could lead to a surge in bond yields, which can have far-reaching consequences for the economy. They point out that when bond yields move sharply higher over a short period, it can act as a macro shock, leading to increased correlations among assets.

With earnings season underway and investors pricing divergent corporate fortunes, the increased volatility in bond yields could disrupt the market's return dispersion trade.