Warsh's New Communication Style Brings Market Uncertainty Down

Federal Reserve Chairman Kevin Warsh has adopted a more concise communication style since taking office. According to data compiled by Apollo, his September press conference featured about 29% fewer words than his July press conference and roughly a third fewer than in June.

The new Fed chair's approach has been welcomed by some as a way to reduce market uncertainty. Apollo chief economist Torsten Sløk noted that Warsh is showing markets the Fed can communicate clearly and concisely, with less noise and more signal.

However, not all experts agree on the benefits of this new approach. Moody's chief economist Mark Zandi believes it has contributed to higher long-term government bond yields as global investors demand greater yields to compensate for increased uncertainty. The 30-year Treasury bond yield (^TYX) reached its highest level since 2002 on Tuesday.

Former Boston Fed president Eric Rosengren argued that the Fed's decision not to share future policy path forecasts is a key factor in market uncertainty. He noted that failing to explain how policymakers react to incoming economic data can lead to a premium being built into interest rates.