Warsh's Jackson Hole Address: Markets Left Guessing Again
New Fed chair Kevin Warsh is set to address the annual economic symposium in Jackson Hole, Wyoming, for the first time as chairman. The markets are eager to hear some certainty from Warsh on Friday, but they might not get it based on how he has operated so far.
Stephen Kates, a certified financial planner and principal at Clocktower Financial Consulting, said that Warsh is 'definitely holding things close to his chest.' This lack of transparency has added tension to bond markets, where long-term Treasury yields have risen in recent months.
Kates noted that higher borrowing costs can tighten financial conditions without an explicit Fed rate hike. He also pointed out that other forces are pushing yields up, including inflation concerns and growing government and corporate debt issuance.
Warsh may be avoiding guidance to maintain maximum flexibility with monetary policy in a rapidly shifting economy. However, Kates said there's a middle ground between giving too much guidance and none at all, which would allow policymakers to explain their methodology without making predictions.