The richest Federal Reserve Chair in history makes an appearance, as it coincides with the Iran ceasefire agreement’s expiration—markets are set for a pivotal week ahead

Core Events
On April 21, two key events that will shape market direction will occur simultaneously:

• Kevin Warsh will appear for Senate questioning as he vies for the position of the next Federal Reserve Chair.

• The Iran ceasefire agreement expires, adding new uncertainties to the geopolitical situation.

Who Is Kevin Warsh
He is a sharp critic of the Federal Reserve’s traditional “safety-net” logic. In 2011, he resigned from his role as a Federal Reserve Governor because he was dissatisfied with quantitative easing. He has said that ongoing quantitative easing is the root cause of economic capital misallocation, and he also called the Federal Reserve’s large-scale money printing in 2020 “one of the worst mistakes in history.” His stance is to “cut interest rates + reduce the balance sheet,” with a plan to compress the Federal Reserve’s balance sheet from over $7 trillion to $4 trillion, and to have private markets bear the first burden in times of crisis while the central bank delays taking action.

Market Impact

• The US Treasury yield curve shows a “bear steepening”: short-end rates ease slightly, while long-end rates rise. Due to market concerns that inflation will be difficult to rein in, the US government’s bond issuance has been overly aggressive, and Warsh might not buy new bonds, long-end yields are supported and struggle to fall further, and the valuation of growth stocks will be slowly compressed.

• US Dollar: In the short term, it is supported because the Federal Reserve is not in a hurry to loosen policy, making its advantage over easing regions such as Europe and Japan particularly clear. In the long term, affected by the global de-dollarization structural trend, it may weaken gradually.

• Gold: Trading sideways around $4,760, caught between two logics—“inflation hedging” and “ultimate asset re-pricing if the Fed no longer rushes to rescue the market as its first response.” Attention should be paid to Warsh’s remarks at the hearing regarding the speed of crisis response.

• Renminbi: Relatively stable performance. On one hand, China’s central bank has increased gold purchases for 17 consecutive months to adjust the structure of foreign exchange reserves. On the other hand, amid tensions in the Strait of Hormuz, the impact on China’s energy procurement channels and supply chains is controllable, making the renminbi a relatively stable safe haven.

Key Takeaways for the Public

1. Closely watch Warsh’s answer at the April 21 hearing on “how quickly the Fed acts in a crisis.”

2. Track the trajectory of the 1–2 week US 30-year Treasury term premium after the hearing to judge how much confidence the market places in Warsh’s proposals.

3. Observe the real direction of 30-year Treasuries and the Nasdaq to clarify how the market is pricing Warsh.

4. Pay attention to global central bank actions, especially the long-term allocation direction of China’s central bank increasing gold holdings.

Implications
A change in leadership at the Federal Reserve signals that the certainty of the market’s “central bank safety net” has been broken, and the basis for asset valuation may be re-assessed. Investors need to adapt to the shift in the tide.#Gate13周年现场直击