Fed leadership transition policy uncertainty

Held at 2.1.4 levels (0.50 ± 0.11). The 10Y rose to a 4.62% Tuesday close (intraday 4.67%) - the contradiction with Warsh's "room to cut" framing widening at the margin, but no new Warsh catalyst landed. Swearing-in still Friday May 22 per the May 15 Fed Reserve announcement; the substantive transition opens post-ceremony, then the June 16-17 first-Warsh-as-chair FOMC. Width held at 0.11. Beta(10, 10) encodes ~20 effective observations; the 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. Warsh's formal swearing-in ceremony is scheduled for Friday May 22 2026 at the White House - confirmed by the May 15 Fed Reserve announcement of Powell as chair pro tempore until Warsh is sworn in. 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. Friday May 15 delivered the sharpest rate-path repricing of the cycle: 10Y to 4.59%, CME FedWatch hike-by-December to ~56% from ~36% Thursday. Monday May 18 intraday extended to 4.61-4.63% before pulling back to a 4.601% close on the strike-cancellation flow; Tuesday May 19 closed 10Y at 4.62% (intraday high 4.67%), the rate-path repricing reasserting. Global yields (German bund 15-year high, JGB 10Y 29-year high) remain elevated. The contradiction between Warsh's "room to cut" framing and the inherited backdrop (CPI 3.8%, PPI +6.0% YoY, imports +4.2% YoY, 10Y 4.62%) remains in place, but the substantive transition question still opens later: first Warsh-as-chair public statements come after the Friday May 22 White House ceremony, and the first Warsh-as-chair FOMC is June 16-17.