Kevin Warsh

Kevin Warsh as the incoming Fed chair is being read by major fixed income managers as a structurally hawkish signal, not a cyclical one. The implication is that the long end of the US yield curve stays under pressure from a chair less inclined toward forward guidance and quantitative easing, while the two to five year sector offers carry with less duration risk if Warsh maintains rates higher for longer than markets currently price. For UK pension funds and liability-driven investors managing dollar fixed income, the Warsh era trade is a shift in portfolio duration, not a directional call on a single meeting. Gilt markets will watch this closely because a sustained period of elevated US yields compresses the rate-differential argument for Bank of England cuts and adds pressure on sterling.

The former Fed governor returns to lead monetary policy as inflation pressures persist.

US Attorney closed criminal probe into Fed Chair Powell last Friday; he stays on Board of Governors post-transition to Kevin Warsh around May 15th.

Kevin Warsh rejected accusations he would be Trump's 'sock puppet' at the Federal Reserve, defending his potential nomination during Senate questioning.