Dowling Securities: Wash is unlikely to persuade colleagues to support the Fed's interest rate cuts or adjustments to the balance sheet in the short term.

Gennadiy Goldberg, head of US interest rate strategy at TD Securities, said that the nomination of Kevin Warsh as the Chairman of the Federal Reserve has caused the yield curve to steepen, as the market remains deeply concerned about the independence of the Federal Reserve. Warsh has long criticized Federal Reserve policy, but most of his criticisms are directed towards the Fed being too dovish, making it difficult for the market to predict his long-term policy direction. He is also against the Fed using its balance sheet tools. However, as the Chairman is just one of the 12 voting members, he still needs to persuade his colleagues to support rate cuts or adjustments to the balance sheet policy - both of which are unlikely to happen in the short term. Current policy will remain unchanged, but the market will continue to be on edge until Warsh makes his stance clear.