Forward Guidance · Monday, August 3, 2026
The Federal Reserve's recent meeting has created market uncertainty, particularly regarding their approach to inflation. Investors are questioning which inflation gauges the Fed is prioritizing, with concerns that a lack of clarity could lead to significant volatility in the bond market.
“Um, yeah, think going in there, odds are around 60% for a pause, 40% or so for a hike. And presented with with a pause, but with three dissents. Um, which is super interesting.”
“investors at pricing nearly two increases over the next 12 months. What they heard Wednesday was the chairman who's willingness to deliver them, they now doubt.”
“just this question mark of what even inflation gauge are we using? Kevin Warsh was asked about it. And asked about what inflation measure, what measure the Fed relies on. Um, he said that as official PCE gauge, but said that he left room beyond it and that his own lens is broader.”
“So, you know, obviously if you're a bond investor, and you don't know what inflation gauge the Fed is even trying to focus on, that's going to cause some pretty meaningful rate volatility.”