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Warsh's no guidance >> 30y UST yields biggest move ever on FOMC day / NVDA CDS / KOSPI -33% in July

  • sc0172
  • 23 hours ago
  • 3 min read

  • FOMC : Divided Fed holds rates: the central bank left rates unchanged in a 9-3 vote, but chair Kevin Warsh declined to signal the next move, leaving markets guessing and sending yields on 30-year US Treasuries to 5.2%, their highest since 2007, He flags the intermeeting move in real and nominal yields (materially higher, top-decile intermeeting move), frames it as the reduction in forward guidance working as designed: "We haven't done much in 42 days. The markets have done quite a bit." >>> AND that is what they wanted, cut forward guidance, bring in a more 2waqy risk for markets, give less of 'one way bet' for market specs... make sense ! the supply of bonds, durations form govt, AND hyper scalers IS an issue which wasn't priced...>>> The post-meeting press conference is a vehicle for forward guidance. Warsh has stopped it and restated that today at the top he is "steering clear of forecasting," and "market participants are learning to play the ball, not the referee."

  • America tried to choke off China’s chip access, but instead pushed China to innovate faster. The result is cheaper, more efficient AI, and China may have gained the edge through necessity rather than brute force

  • If Nvidia is so rich why has its credit costs (5y $ CDS) exploded in the past months? GAAP net income of $45.5bn in Q1 and yet? More like 'Mind the Gap!'

  • Markets : The other Korean index, the KOSDAQ, is nearly back to April 2025 lows!..(60% round trip..), Microsoft and Meta split investors, U.S. Debt now exceeds 100% of GDP for the first time since World War 2, South Korea's Stock Market has plunged more than 33% this month, in FX land CHF continues to grind lower, as expected, not a whole lot happening on USD side, though slightly softer yesterday as long-end sol doff hard! let's hope this doesn't go the way of JPY and JGB's...

  • US FTC sues Hims & Hers for sending user health info to Meta, Snap

  • so KOSPI down 33% this month... More than 360,000 margin accounts were forced into liquidation in Korea, per Citi. 62% of those wiped out were reportedly under the age of 35


The bond market says ''Warsh has lost it, he is nuts' no guidance etc >>> let's just hope USD and UST don't go the way of JPY and JGB's... clearly...if he looses #duration and the long-end it is going to be a biblical mess !...markets can move very quickly these days....

On the other hand, rightly or wrongly Warsh warned of no forward guidance, so it HAS/HD to mean more of a 2way risk and thus higher VOL...

At the end of the day he was Trump's choice, chosen by Bessent, and it's backfiring...


Greg Yip : This Warsh contradiction has been nagging at me. At Sintra at the start of the month, he took comfort at the recent decline in bond yields, implying bond markets understood low inflation was on the way. Today, he took comfort at higher bond yields, saying they will deliver low inflation. How can this be: that lower bond yields are reasons to feel good about inflation, but higher bond yields are not a reason to feel bad about it? Without him articulating a monetary and economic framework, these statements make it feel like he's winging it.










Got to love progress but this is so stupid















 
 
 

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