Kevin Warsh is about to chair his first FOMC meeting, after being confirmed against a political background. Warsh inherits a difficult policy environment where the US is hit by three concurrent shocks: tariffs, the energy supply shock and the AI investment boom. These shocks put pressure on his ability to pursue his goals. In this webinar, Rogier Quaedvlieg, Larissa de Barros Fritz and Georgette Boele will walk you through their assessment of the Warsh’s likely policy aims, as well as their feasibility given current economic constraints. They will also discuss the potential implications for rates and the dollar.

Fed Chair transitions have historically been followed by higher Treasury yields, as markets reprice policy uncertainty and the incoming Chair’s reaction function. This post-transition rise in Treasury yields is still yet to materialize. Any repricing under Warsh may be more persistent than in past transitions because he takes over an already fragile Treasury market. Warsh’s preference for lower rates may support the front-end of the curve, but concerns about political pressure, reduced transparency and conviction-based policymaking could keep term premia and long-end yields under upward pressure. Even a gradual reduction in the Fed’s balance sheet would matter for Treasuries, because it raises free float and shifts more duration risk onto investors with less stable demand. Rising Treasury issuance and a worsening fiscal backdrop mean that higher yields increasingly feed back into debt-servicing costs, rollover risk and term premia. The shift away from foreign and official buyers toward more cyclical domestic investors makes Treasury demand less stable, reducing the market’s ability to absorb growing supply without higher term premia.