Bond traders are testing Kevin Warsh: The Fed chair will heed—but not be ruled by—them, says an economist who spent years sitting next to him

Bond traders are testing Fed Chair Kevin Warsh as he weighs their input while remaining independent, according to an economist who worked alongside him at the Federal Reserve. Treasury yields have risen, with 30-year Treasuries nearing 5.3%, the highest level since 2007. Warsh has declined to provide forward guidance, leaving analysts uncertain about the Fed's future actions.

Some argue that Warsh's credibility is being tested by the bond market, while others maintain that he is committed to bringing inflation under control at a 2% rate. Warsh's defenders highlight his clarity on his intentions, but critics question his effectiveness in providing forward guidance. Economists are divided on Warsh's approach, with some praising his focus on the bigger picture and others expressing frustration with his lack of communication.

Warsh's defenders emphasize that he is asking important questions and seeking input from various stakeholders, even if the answers may be controversial.