Key Highlights

● Warsh said he does not favor forward guidance in normal times.

● The Fed's statement leaned hawkish with two dissents.

● Market odds of a December hike rose after the meeting.

● Investors are left relying more on incoming economic data.

For years, investors grew used to a Federal Reserve that told them where it was headed. Under Chair Kevin Warsh, that era appears to be fading, as he said at his press conference that he does not favor forward guidance in normal times when the economy is strong.

The comment came after the Fed left its benchmark rate range unchanged in a 10-2 vote, with two officials pushing for a hike, as Warsh said price stability is not about some fixed date on a calendar or some isolated data point.

Reading the Fed Without a Roadmap

Without explicit guidance, investors are left to interpret the statement and the votes. The Fed's statement offered plenty of hawkish clues, saying economic activity is expanding at a strong pace and inflation remains elevated, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favor of a hike.

Warsh also said the Fed has made clear its willingness and readiness to act, and markets took that as a signal, lifting the odds of a December hike after the decision.

The Data Takes Center Stage

Less guidance means more weight on economic releases, with several jobs reports and a consumer price report arriving before the December meeting, each capable of moving rate expectations sharply.

Treasury yields showed the most sensitivity to the shift, with long-dated yields climbing while the two-year yield spiked after the decision before easing to a slightly lower close, resulting in a steeper curve.