Fed leadership transition policy uncertainty

Moved from 2.1.1 0.50 ± 0.12 to 0.52 ± 0.11 - modest tick up on the Monday extension of the rate-path repricing (10Y to 4.61-4.63%, global yields at multi-year highs) sharpening the contradiction with Warsh's "room to cut" framing. Width tightens 0.12 -> 0.11 on the market's clearer pricing of the inherited inflation backdrop. The substantive transition question still gated by (a) the first Warsh-as-chair public statements - first official Monday in office, nothing yet - and (b) the June 16-17 FOMC. Beta(10, 9.2) encodes ~19 effective observations - the snapshot's posterior on this thesis remains appropriately diffuse pending Warsh-as-chair output.

Powell completed his Fed chair-term exit Friday May 15 2026 with conciliatory final remarks: advised Warsh to "stay out of elected politics" and pledged to keep a low profile as a governor through his Board term to 2028. Senate had confirmed Warsh as Federal Reserve Chair 54-45 on Wednesday May 13 - the narrowest modern-era margin since the current approval process was put in place in 1977; Fetterman (D-PA) was the only Democratic crossover. The 13-11 party-line Banking Committee advance, the prior 51-45 governor confirmation, and the 54-45 chair confirmation all stand as historically partisan Fed-Chair-track outcomes. Warsh confirmation-hearing framing - "won't be sock puppet" and "room to cut without inflation" - introduces a dovish-tilt risk to the dollar / long-duration cross. Friday May 15 delivered the sharpest rate-path repricing of the cycle: 10Y to 4.59% (fresh ~1-year high; biggest weekly jump since April 2025), CME FedWatch hike-by-December to ~56% from ~36% Thursday. Monday May 18 morning extended it: 10Y to 4.61- 4.63% with Japan 10Y / UK gilt / German bund all at multi-year highs. The contradiction between Warsh's "room to cut" framing and the inherited backdrop (CPI 3.8%, PPI +6.0% YoY, imports +4.2% YoY, oil $107.98, 10Y 4.62%) sharpens further. No Warsh-as-chair public statement yet on his first official Monday in office; substantive policy-content question opens at the June 16-17 FOMC.