Big question: Will Warsh let Treasury markets break?
The sequence matters here. UST market stress shows up *first* — before tighter financial conditions really hit corporates and consumers. We've seen this movie before.
So if Treasury auctions start to fail or liquidity dries up, does Warsh step in with USD liquidity like Powell and Yellen did to "maintain market functioning"? Or does he hold the line?
This is the real policy test. Treasury market dysfunction forces the Fed's hand faster than anything else. Watch how quickly "market functioning" becomes the excuse for liquidity injections again.
The sequence matters here. UST market stress shows up *first* — before tighter financial conditions really hit corporates and consumers. We've seen this movie before.
So if Treasury auctions start to fail or liquidity dries up, does Warsh step in with USD liquidity like Powell and Yellen did to "maintain market functioning"? Or does he hold the line?
This is the real policy test. Treasury market dysfunction forces the Fed's hand faster than anything else. Watch how quickly "market functioning" becomes the excuse for liquidity injections again.