The break with tradition came swiftly. After a decade of telegraphing moves to avoid market shocks, new Fed chair Kevin Warsh declared a tight-lipped era, intending to be "very curt" on rate plans. The question: will this soothe or stoke bond market volatility? Warsh has long opposed forward guidance — signalling intentions ahead — arguing it traps central banks and blinds them to market signals. "Financial market prices are probably the most important source of information," he said. "But when all the financial markets are doing is reflecting back what we've said, then we're... being blind to it."

Critics warn the shift comes at a perilous time. Janet Yellen says markets can't price the 10-year Treasury yield without understanding Fed reaction functions. Ajay Rajadhyaksha of Barclays calls forward guidance a "mirror": "The Fed watches markets; markets watch the Fed. And no one's actually watching the economy."

The backdrop: global debt surges. Hedge funds now hold $2.5tn in Treasuries, doubling since 2023, dwarfing China's $659bn. The BIS warns of rapid hedge fund exits — a top stability risk. Torsten Sløk of Apollo sees higher "leverage unwind" odds.

The debate traces to 2008. Ben Bernanke used forward guidance as crisis backstop. Warsh quit in 2011 over communications policy. Now Christine Lagarde and Andrew Bailey signal sympathy with his stance.