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Jobs report sets fresh test for Fed chair Warsh’s reduced guidance stance
Ahead of the July employment release, the 30-year Treasury yield hit its highest level since 2007 and the 10-year yield last seen in January 2025 after Warsh’s communications signaled less clarity on next steps.
Federal Reserve Chairman Kevin Warsh is pressing for the bond market to play a bigger role in determining the “price of money,” and investors are set to get a key response on Friday with the release of the July employment report.
Warsh’s approach became clear after the Fed’s most recent policy meeting, when a rate hold was widely expected, but markets focused on the lack of a clear signal for what comes next. After the event, longer-dated Treasury yields rose quickly, with the 30-year yield reaching its highest level since 2007 and the 10-year yield touching a level last seen in January 2025.
Oil prices also spiked heading into the meeting as conditions around the Iran war shifted, renewing investor questions about Warsh’s inflation-fighting stance. Although yields later declined modestly as oil eased, investors say the implications of Warsh’s shift in communications are still unsettled.
According to Reuters, Bill Campbell of DoubleLine Capital described a “tension” between what Warsh wants and what the market wants, with the need to infer policy from limited guidance. Chris Low of FHN Financial said forward guidance, used after 2008 when rates were near zero, can help lower long-term borrowing costs, but he warned that reducing signaling can tie the Fed’s hands when faster action may be warranted.