Federal Reserve chair Kevin Warsh's stripped-back communication approach is "already backfiring," investors warn, risking the central bank's influence over the $31tn US Treasury market. Thirty-year US borrowing costs jumped to their highest since 2007 on Thursday, reaching 5.24 per cent, despite the Fed holding policy rates steady.

Warsh vowed the Fed "will not waver" against inflation, but the lack of forward guidance spooked markets. Stephen Jones, CIO at Aegon Asset Management, said Warsh "has let go of any air of control over the Treasury market." The yield curve steepened sharply, with the 30-year/two-year gap widening to 0.97 percentage points — its sharpest move in almost a year.

Francesco Pesole at ING called it a "loss-of-confidence trade." Three Fed governors dissented, voting for a rate hike. Warsh defended the strategy as "a change for the better," arguing real rate rises had already tightened policy. But Mike Riddell at Fidelity said: "Deliberately communicating less means more market volatility and uncertainty."