Bitunix Analyst: From Forward Guidance to Policy Fog, the Warsh Era Officially Begins a Global Volatility Reassessment
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Bitunix analysts: The Federal Reserve has downplayed policy guidance, with "uncertainty premium" becoming the main battleground, rather than the interest rate path.
According to BlockBeats, on July 7th, the focus of global markets is gradually shifting from interest rate direction to policy communication methods. Federal Reserve Governor Waller stated that forward guidance should not be a fixed framework and could even be completely eliminated if necessary, reiterating that the central bank will not deliberately maintain low interest rates to address government fiscal deficits. This means that the market will rely more on real-time economic data rather than pre-determined interest rate paths from central banks, reducing policy predictability. It also means that asset prices will become increasingly sensitive to inflation, employment, and economic data, and market volatility may refocus during periods of major data releases. On the other hand, Middle East risks have escalated again. Reports of missile attacks on merchant ships in the Strait of Hormuz have surfaced again, threatening to shatter the previously established window of easing tensions between the US and Iran. Trump reiterated that he would not rule out escalating military action if negotiations fail. However, Saudi Arabia lowered its official selling price for crude oil to the Asian market in August, reflecting relatively ample supply. The energy market is currently still oscillating between "geopolitical risks" and "supply easing," and whether oil prices can rebound in the short term depends on whether the conflict further impacts actual supply. On the other hand, the issues of Japanese debt pressure and the continued weakening of the yen have resurfaced, and market doubts about the Bank of Japan's policy space have not subsided. The trend of global capital flowing into high-yield dollar assets has not changed significantly. For the crypto market, what truly deserves attention is not a single event, but the loss of the "certainty" provided by central bank forward guidance. As policy begins to rely entirely on data, geopolitical risks escalate, and global liquidity remains tight, the crypto market will continue to be primarily driven by changes in risk appetite and liquidity momentum in the short term. Price movements will continue to be repeatedly disrupted by macroeconomic events and market sentiment. Until capital flows truly form a unified direction, a cautious stance is expected to persist.
Federal Reserve Governor Waller: If necessary, the use of forward guidance can be abandoned to maintain policy flexibility.
PANews reported on July 6 that Federal Reserve Governor Waller stated at a conference on monetary policy transmission in Rome, Italy, that monetary policy decisions must be based on the current "initial conditions" of the economy and cannot mechanically apply historical averages. He pointed out that large-scale shocks can trigger non-linear behavioral changes, thereby altering the time lag of monetary policy and the slope of the Phillips curve. Waller emphasized that forward guidance can influence the market in advance and accelerate policy transmission under certain conditions, but if the wording is too rigid or faces multiple possible scenarios, it will limit FOMC operations such as interest rate hikes and delay the timing of adjustments. The Federal Reserve has established a working group to assess the role of forward guidance, and he believes that in some situations, the use of this tool should be weakened or even stopped, and decisions should rely more on real-time economic data.
Federal Reserve Bank of Walter offered two key considerations for monetary policy: initial conditions and forward guidance determine the transmission effect.
According to Odaily Odaily, Federal Reserve Bank of Walter Waller offered two points of consideration regarding the monetary policy transmission mechanism, emphasizing that policy effectiveness depends on initial conditions and the way forward guidance is used: First, "initial conditions are crucial," meaning monetary policy assessments should be based on current economic conditions, not historical averages. Second, regarding the role of forward guidance, he believes that while forward guidance can accelerate policy transmission in certain situations by influencing market expectations and changing financial conditions in advance, if it is too rigid or lacks flexibility, it may weaken policy effectiveness or even delay necessary policy adjustments. Waller emphasized that when multiple economic scenarios exist, the “average path” cannot be simply used as a basis for policy guidance, and policymaking needs to maintain adaptability and flexibility to different scenarios.
Waller: Overly aggressive forward guidance could become an obstacle.
According to Mars Finance, as reported by Jinshi, Federal Reserve Governor Waller stated that forward guidance, if "too hawkish or rigid," could become an obstacle to policy implementation.
Bitunix Analyst: Canceling Iranian Oil Waivers and Deteriorating Hormuz Situation Increase Risk Asset Volatility
According to BlockBeats, on July 8th, global markets were focused on the renewed deterioration of the situation in the Middle East. The US not only expanded its military strikes against Iran but also revoked waivers for Iranian oil sales, further escalating security risks in the Strait of Hormuz. International oil prices surged by approximately 5%, reflecting the market's re-inflation of energy supply uncertainty. The situation is no longer just a simple military conflict; rather, it involves a simultaneous increase in risks to energy transportation and the global supply chain. Iran continues to strengthen its claims to control the Strait of Hormuz, while the US military has raised the local shipping threat level to "serious," indicating that global energy transportation remains highly volatile. On the other hand, Saudi Arabia's plan to expand its Red Sea oil pipeline shows that major oil-producing countries have already planned alternative transportation routes to reduce their dependence on the Strait of Hormuz. Regarding monetary policy, New York Federal Reserve President Williams stated that lower energy prices have helped improve short-term inflation, but policy remains in an appropriate position. He did not provide clear guidance on future interest rate direction, and the Fed will continue to adjust policy based on economic data. It is worth noting that the risks in the US technology sector have also increased simultaneously. Nasdaq 100 volatility has reached a two-decade high, with AI-related trading remaining highly concentrated. Some Wall Street institutions have begun using options for hedging and are gradually shifting funds towards defensive sectors such as healthcare and consumer staples, reflecting profit-taking pressure on highly valued tech stocks. In the crypto market, Bitcoin remains range-bound. Short-term market liquidity is mainly concentrated in four key liquidation zones: $62,500 and $60,000 on the downside, and $64,300 and $67,700 on the upside. With continued macroeconomic disruptions, prices may still see liquidity liquidation around highly leveraged positions, and short-term volatility is expected to remain high. The market will continue to monitor developments in the Middle East, oil prices, and global risk sentiment.
Opinion: Warsh should publicly resist Trump's pressure on the Federal Reserve and uphold the central bank's independence.
According to Mars Finance, on July 6th, Bloomberg columnist Jonathan Levin published an article stating that US President Trump and his allies are continuously pushing to influence Federal Reserve decisions through personnel changes, including attempting to replace Fed Governor Lisa Cook and interfering in the selection of the Federal Reserve Bank of Atlanta president, in order to expand the influence of White House supporters on the Federal Open Market Committee (FOMC). Levin believes that Kevin Warsh, considered a leading candidate for the next Fed chair, should publicly oppose White House interference, support Jerome Powell and Cook to complete their terms, and demand that the White House withdraw from the selection process for regional Fed presidents; otherwise, his future credibility in leading the Fed and his influence within the committee will be weakened. The Fed's independence is key to maintaining stable inflation expectations and the credibility of monetary policy; continued political interference could damage the stability of the US macroeconomy.