Signal Over Noise A New Fed Framework

The report analyzes the inaugural policy meeting of Fed Chair Kevin Warsh, which resulted in a shift away from explicit forward guidance and a hawkish stance on institutional credibility. Markets responded with a bear flattening of the yield curve, yet UBS maintains a positive outlook for US equities through year-end.

Key Takeaways

• 1.The Fed, under Chair Kevin Warsh, held rates steady at 3.5-3.75% and adopted a 'skinny statement' approach, removing explicit forward guidance.
• 2.Market reaction included a 'bear flattening' of the Treasury curve, with 2-year yields rising 16 basis points to 4.2% while long-term yields remained stable or declined.
• 3.UBS remains positive on US equities into year-end, citing strong economic and earnings growth, despite the future risks associated with current bear flattening.

Table of Contents

• Signal over Noise: A new Fed framework
• Weekly - Regional View US
• Global asset class preferences definitions
• Appendix

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