Key takeaways
- Kevin Warsh was confirmed as Fed chairman by the Senate 54-45 on 13 May 2026 and took the oath on 22 May.
- The March 2026 dot plot showed a 2026 median federal funds rate of 3.4% — with individual projections spanning 2.6% to 3.6%, a 100 basis point range.
- The 2-year Treasury yield rose from 3.38% on 27 February to 4.23% on 30 July 2026 — 85 basis points, with no change in the policy rate.
- The 10-year rose from 3.97% to 4.68% over the same period; 2s10s went from 59bp to 38bp on 9 July and back out to 45bp on 30 July.
- A 1 percentage point yield rise costs roughly 6% on a 6-year duration bond sleeve and roughly 15% on a 15-year one.
What the Senate confirmed, and what it did not
The Senate confirmed Kevin Warsh as chairman of the Board of Governors on 13 May 2026 by 54 votes to 45, the narrowest margin for a Fed chair in the modern era. He took the oath on 22 May, the FOMC unanimously selected him as its chairman, and his term as chair runs to 21 May 2030.
His written opening statement to the Senate Banking Committee on 21 April is on the record. It commits to price stability — "Inflation is a choice, and the Fed must take responsibility for it" — and to institutional restraint: "the Fed must stay in its lane." It criticises "the use of old models that are no longer fit for purpose" and "the tyranny of the status quo." It does not, in its written form, contain a pledge to abolish any specific publication.
Reporting from the hearing indicates he favours reducing reliance on forward guidance, and the dot plot is its most visible instrument. That is the premise worth testing — not whether he says it, but what it would do.
The dot plot's own dispersion is already 100 basis points wide
Start with what the projection contains. In the March 2026 Summary of Economic Projections the median federal funds rate for end-2026 was 3.4%, with individual projections running from 2.6% to 3.6%. Median core PCE was 2.7%; median unemployment 4.4%.
A 100 basis point spread across the committee, published quarterly, is not precise guidance. It is a distribution that markets compress into a single median and then trade as a commitment. The chart plots that structure: the 2026 median at 3.4%, the low dot at 2.6%, the high dot at 3.6% and the longer-run median at 3.1%.
The dot plot already tells you the committee does not agree. Removing it does not remove the disagreement; it removes the market's ability to see it — which is the whole mechanism by which its removal would raise volatility.
Rate volatility is not a side effect of ending guidance. It is the point.
Forward guidance functions as a volatility suppressant. When the committee publishes a path, the front end trades in a band around it and realised volatility in short rates compresses. Withdraw the publication and the front end has to price a distribution rather than a point.
The 2-year Treasury is where this lands first. It went from 3.38% on 27 February 2026 to 3.76% on 18 March, 3.98% on 13 May (confirmation day), 4.20% on 17 June, 4.16% on 9 July and 4.23% on 30 July — a rise of 85 basis points in five months, with no change in the policy rate. The 10-year rose from 3.97% to 4.68% over the same window. The 2s10s spread compressed from 59 to 38 basis points by 9 July, then widened back to 45bp by 30 July as the long end sold off faster than the front.
Some of that is the energy shock. Some of it is a market repricing a Fed whose reaction function it can no longer read off a chart.
What this costs a bond sleeve, in numbers
Duration is the translation layer. A bond sleeve with 6-year effective duration loses approximately 6% of value for each 1 percentage point rise in its yield. A long-duration sleeve at 15 years — roughly the modified duration of a par 30-year Treasury at its 30 July 2026 yield of 5.21% — loses approximately 15%.
The 85 basis point move in the 2-year since late February is worth roughly 1.6% on a 2-year-duration position — small. The 71 basis point move in the 10-year is worth roughly 5.7% on an 8-year-duration core bond fund. The asymmetry that matters is at the long end: if ending forward guidance widens the term premium by even 50 basis points, a 15-year duration position absorbs roughly 7.5% — more than the coupon it earns in a year and a half.
That is the sizing question a change in the communication regime poses. Not "what will rates do," but "how much duration is held on the assumption that the path is knowable."
What would falsify this
The counter-argument is strong. Forward guidance may suppress measured volatility while raising the probability of a violent repricing when it proves wrong — the 2021-22 experience. On that reading, ending the dot plot raises day-to-day volatility and lowers tail risk, a trade many bond portfolios would take.
The evidence here also cannot separate causes. Between February and July 2026 the 2-year rose 85 basis points while Brent went from $71 to $138, back to $70 and up again past $105. Attributing any specific portion of that move to a communication-regime change is not possible from yield data alone.
Nothing in the record shows the new chair has ended anything. The June 2026 FOMC met with the projections framework still in place, and the FOMC that met on 29 July 2026 held the target range at 3.50-3.75% by 9 votes to 3, with Beth Hammack, Neel Kashkari and Lorie Logan each dissenting in favour of an immediate quarter-point increase. The disagreement a dot plot displays four times a year was, at that meeting, displayed in the statement instead.
The document to read is the September projections
Not the statement, not the press conference. If the Summary of Economic Projections is published in September 2026 without the federal funds rate chart — or is not published at all — the regime has changed, and the first place it registers is the dispersion of the 2-year yield, not its level. Until then, the dot plot's own 100 basis point range says more about the committee's uncertainty than any withdrawal of it could. The shock the committee is projecting through and the labour data it is reading.