Federal Reserve Chairman Kevin Warsh's decision to abandon forward guidance on monetary policy is causing significant volatility in the bond market. Torsten Slok, chief economist at Apollo Global Management, highlighted that this change is fueling a sell-off in 30-year Treasuries following the Federal Reserve's recent rate decision.
This sentiment is echoed by Jeffrey Gundlach, who observes divergent moves across the Treasury curve, indicating investor skepticism about the Fed's future actions. Marketscreener also reports shorter-dated yields falling as the Fed keeps rates unchanged. This suggests that the bond market is sending a clear message regarding the need for the Fed to address inflation.
The 10-year Treasury cash yield was reported at 4.675%, showing a slight increase of +0.057 and a 5-day change of +0.313. Apollo Global Management's stock (APO) was trading at $119.77, down -3.95% but with a 5-day increase of +1.16%, demonstrating a market capitalization of $71.89 billion.
The lack of clear forward guidance from Chairman Warsh is creating uncertainty, leading to a late reversal in US Treasuries after the Fed left rates steady, with risk evaporating. The bond market appears to be pressuring the Federal Reserve to implement more decisive actions to manage inflationary pressures.
