Warsh's Silence Sparks Bond Market Jitters

Bond traders are growing increasingly uncertain about how to navigate the US Treasury market due to a lack of clear guidance from the Federal Reserve. According to investors, including Brandywine Global Investment Management and Wellington Management, the risk of a deeper Treasury rout is rising as Fed Chairman Kevin Warsh keeps investors in the dark about his plans for inflation control. The Treasury market has been signaling that Warsh's credibility on fighting inflation is eroding after he failed to outline his strategy when policymakers left interest rates unchanged last week.

The New York Times reported on Friday that Warsh may reduce the frequency of scheduled policy meetings, which could further limit the flow of information. This lack of transparency has bond investors flying blind as they try to anticipate future moves in the market.