🟡 Warsh’s Fed–Treasury Accord Call Sparks Debate in $30T Bond Market
Kevin Warsh — President Trump’s nominee to lead the Federal Reserve — has ignited discussion on Wall Street with a proposal to redefine the relationship between the Federal Reserve and the U.S. Treasury.
🔑 Key Facts
Warsh has floated the idea of a new Fed–Treasury accord, modeled on the 1951 agreement that once clarified roles between the central bank and the government.
The proposal could formalize balance sheet size and coordination with U.S. government debt issuance plans.
Markets are debating the implications: a minor bureaucratic tweak might have little short-term effect, but a deeper reform could raise bond market volatility and stir concerns about central bank independence.
A more structured accord might look like yield-curve control or closer monetary–fiscal coordination, something many analysts view cautiously.
🧠 Expert Insight
Investors are watching closely because any shift in how the Fed and Treasury coordinate — especially around the Fed’s huge $6T+ balance sheet — could change U.S. Treasury market dynamics, yield expectations, and risk pricing.
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