Monetary policy uncertainty relatively stable

Everyone in the bond markets has been talking about Fed Chair Warsh and his changing views on forward guidance. His policy stance is clear. He does not want to give forward guidance. He will reduce guidance to the minimum. Markets have reacted to this with much wailing, yet we need to focus on the actual impact on markets. One way to look at this is through market-based measures of monetary policy uncertainty. We have a history through an index created by the San Francisco Fed. The data suggests there was a spike when Chairman Warsh was appointed but has been relatively stable for the last few months. Overall, the Warsh regime is showing higher uncertainty, but the levels are not at extremes. Nevertheless, there should be concern not for the short run but for numbers that are closer to 24 months. Longer-term uncertainty is always higher than shorter forecasts; however, there needs to be focus on what investors are thinking beyond 2026.