Next Wednesday, Powell will step onto the podium for the press conference, concluding this meeting with a decision that holds no suspense—leaving interest rates unchanged. The market is not truly waiting for this decision. On Friday, the U.S. Department of Justice dropped its criminal investigation into Powell. The biggest political obstacle that had been used to block Trump's nominee—Kevin Warsh—was thus removed. Data from prediction market Kalshi that day showed: the probability of Warsh being officially confirmed before Powell's term expires on May 15 jumped from 30% to 84%. In other words, the press conference on April 29 will most likely be the last time Powell stands at the podium as Chairman of the Federal Reserve. Warsh Plans to Dismantle the Foundation On April 21, Warsh sat before the Senate Banking Committee and made the following statement: "Too many Fed officials, both current and former, have expressed their views in advance on where they believe interest rates should be at the next meeting, next quarter, or next year." The implications of this statement reach much further than any single decision to raise or lower interest rates. During the same hearing, he explicitly called for abolishing the "dot plot"—the chart published quarterly that displays the interest rate projections of the 19 FOMC members. He criticized core PCE as a "rough estimate." He stated that inflation "is a choice," characterizing the high inflation of 2021–22 as a policy mistake rather than the result of external shocks. Regarding the regular press conferences held after each FOMC meeting, he refused to commit to continuing them: "The pursuit of truth is more important than repetition." He also hinted at possibly reducing the number of meetings per year but did not provide a specific figure. Forward guidance—the mechanism by which the Fed tells the market in advance what it intends to do—is a system established by Bernanke after 2008. From calendar-based commitments to conditional commitments, and then to the post-FOMC press conferences, the dot plot, and the meticulously parsed statements, this framework has quietly become the implicit foundation for global asset pricing over the past 15 years. Warsh says he intends to dismantle this foundation. Powell Has Already Begun to Retreat Those who have read the transcripts of the FOMC press conferences in January and March of this year should have noticed something. On January 28, Powell stated: "The Committee is not trying to articulate when or by what criteria it will cut rates." Compared to the forward-looking language he has typically used in recent years, the forcefulness of this statement was noticeably softer. By March 18, he went a step further—when pressed on whether forward guidance might change, he unusually stated publicly: "There is currently a lack of consensus within the Committee on how to change the communication approach." This is a sitting chairman saying: we have discussed this internally. Simply put, before leaving office, Powell has already been actively loosening the binding force of forward guidance. This is not entirely a reaction to Warsh's agenda; it seems more like he is intentionally creating space for his successor. The two directions are converging in a strange way: one is gradually fading out in the final press conferences of the outgoing chair, while the other has already announced what he plans to do upon taking over. The loss of anchoring did not begin on the day Warsh takes office. This Is Not Just a Story for the Bond Market Over the past 15 years, the assumption that "the Fed will tell you in advance what it plans to do" has been deeply internalized into the pricing models of almost every asset class. What the stock market will feel first is a tremor in valuations. High-P/E growth stocks can maintain their current multiples partly based on the premise that the future path of the discount rate is predictable—only when you know where interest rates are and where they are heading can the discounted cash flow model produce a credible number. Once Warsh's framework is implemented, this premise disappears. When models start to tremble, the valuation multiples of growth stocks are far more fragile than those of value stocks. This is not a directional interest rate shock, but a problem with the visibility of the discount rate itself; the latter has a more lasting destructive power on valuations. The watershed moment will be whether Warsh provides an alternative framework: if, after taking office, he announces some form of "data-dependent, scenario-based guidance," the compression in growth stock valuations would be significantly less severe than under a scenario of complete silence. The vulnerability in the credit market is more subtle. Corporate bond refinancing decisions rely on having a "basic grasp of the interest rate path over the next three years." Once this visibility disappears, credit spreads will need to compensate for an additional uncertainty premium—and current spreads are at extremely tight levels, the tightest in 25 years, leaving almost no buffer. If spreads start to widen from here, the pace will not be slow. The only condition for this not to happen is if Warsh's "no forward guidance" is interpreted by the Senate and the market as merely a minor adjustment in communication style, rather than a systemic shift. The situation is even more nuanced for exchange rates. Many emerging market central banks have used the Fed's forward guidance as a policy reference frame over the past decade—if this reference frame suddenly becomes unreadable, their own exchange rate policies will become harder to calibrate, and currency volatility will naturally increase. During the 2013 "Taper Tantrum," currencies of emerging markets with weaker reserves fell by 6%–15% within a few months. While the foreign exchange reserve situation in emerging markets has improved somewhat currently, global growth expectations are weaker (the IMF just downgraded global growth for 2026 to 3.1%), meaning the growth premium this time around is thinner. Currently, the MOVE index is around 67, below its historical average of 75–80. Implied volatility in the bond market is at historically low levels; the market is still enjoying the certainty premium provided by forward guidance for free. During the "Taper Tantrum" year, the MOVE index peaked above 125. Back then, the market was panicking about "QE being tapered"—the direction was known, only the scale was changing. This time, the market is facing the potential "disappearance of the communication framework itself"; the source of uncertainty is more fundamental. The MOVE index moving towards 75–80 would be a signal that the bond market is moving first; once it breaks above 90, historical data shows that volatility in the stock and credit markets will begin to follow. How to Read the Press Conference If Warsh is confirmed by the Senate before May 15—current probability 84%—then April 29 will be Powell's final appearance before the media as Chairman. With less than three weeks between now and May 15, if the confirmation proceeds smoothly, the transition will be clean: Powell departs, Warsh takes over, with no overlap. But during these three weeks, the market will not wait quietly. Warsh's statements during his hearing were clear enough; the market will reinterpret every word Powell says during his press conference through the lens of Warsh's agenda—not because both men are simultaneously in power, but because the market is already pricing in that new framework. Powell will not comment on Warsh, will not mount a strong defense of forward guidance, and will not preemptively endorse his successor. He will, as usual, say that "we make decisions meeting by meeting," emphasize "data dependence," and choose the least controversial path regarding the interest rate decision. At the very start of the press conference, the first to move will be Treasury futures—the market will be watching to see if his wording describing inflation leans hawkish or dovish, as this will determine the initial policy conditions Warsh inherits. During the Q&A session, reporters will almost certainly press him on "his views on forward guidance reform"; that answer will be worth parsing word for word. The more Powell emphasizes the value of forward guidance during the press conference, the more the market will expect Warsh to push harder to dismantle it. The surprise of this press conference lies in what is left unsaid. Key Things to Watch Next The Senate voting timeline is the first watershed moment. The DOJ dropping the case removed the biggest obstacle for Senator Tillis, but his own public statements following the case's dismissal remain an information gap. If the Banking Committee passes the nomination smoothly in the first week of May, a full Senate vote is expected during the week of May 11–14—if completed within this window, Warsh would assume office on May 15, the day Powell's term ends. If delayed, Powell would chair one more press conference as Acting Chair, scheduled for June 16–17. The market logic corresponding to these two outcomes is截然不同: the former would concentrate the pricing expectations for "no forward guidance" into the second week of May; the latter would spread and prolong this pressure, giving the market more breathing room. Warsh's first public statement after confirmation is more important than the confirmation itself. Once the transition is complete, the nature of the uncertainty will change—from "who is at the helm" to "whether he will actually implement the things he talked about in the hearing." Historically, no major central bank has completely abolished forward guidance without any alternative plan in place. When the Reserve Bank of Australia abandoned yield curve control in 2021, it also set a transition period. If Warsh, upon taking office, announces some form of "data-dependent, scenario-based guidance," the market impact would be significantly narrower; if he truly opts for complete silence, that would mark the true beginning of the "no-signal era." The MOVE index is the most direct observation window. A move from 67 towards 75–80 signals the bond market moving first; a break above 90 historically sees volatility in the equity and credit markets follow suit. The magnitude of data shocks between each FOMC meeting is also worth monitoring. The follow-up actions of global central banks are not a tail risk but a variable that needs calibration in advance. The ECB and the Bank of Japan have used the Fed's policy path as an important external reference over the past decade. Once this reference frame becomes unreadable, policy divergence among central banks will widen, and the logic of cross-market transmission will become more complex—rising exchange rate volatility is the most underestimated transmission path in this chain. The June 16–17 FOMC meeting is the ultimate verification point. That will likely be the first meeting chaired by Warsh—the first statement without a dot plot, the first press conference that might feature a changed format or frequency. All judgments about "regime change" will need to be reconciled there. The mainstream market expectation currently treats all this as personnel news—waiting until Warsh actually takes office before reacting. But losing an anchor is a process, not a single point in time, and this process begins next Wednesday.
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