Exploiting the Fed's Lack of Credibility

Warsh didn't walk the walk.

Much has already been made of the FOMC meeting last night, both in the fact that we were told what we already expected (no hike in July, but one is looming) and in several points we weren’t expecting (Warsh’s confusing and contradictory presser).

Yet despite the confusion and pulling of forward guidance, the cleanest trade takeaway from the meeting is obvious to us: a clear bear steepening vibe for the coming months.

When you consider the meeting through such a lens, even Warsh’s lack of credibility adds to the appeal of taking on a new trade in the rates space.