Weekly Market Commentary 5-11-2026

“A New Fed Regime: Leadership and Policy Shift”
See what we have to say about the following:

 

 

 

• A New Fed Regime: Leadership and Policy Shift
  The transition from Jerome Powell to a likely Kevin Warsh–led Fed points to a less interventionist central bank with reduced forward guidance and greater reliance on market-driven outcomes amid rising fiscal pressures.

 

• Rethinking the Fed’s Balance Sheet (Chart: Fed’s Balance Sheet Remains Elevated)
  With the Fed’s balance sheet still far above pre-crisis levels, Warsh’s emphasis on gradual runoff and a smaller Fed footprint would shift more interest rate risk and price discovery back to private markets.

 

• Fiscal Pressures and Treasury Supply Dynamics (Charts: Budget Deficits & Treasury Auction Sizes)
  Large and persistent deficits, combined with heavy Treasury issuance and a more price-sensitive buyer base, increase the likelihood of higher yields and greater volatility as markets absorb supply.

 

• STAAC Commentary: Asset Allocation Implications
  STAAC moved to a tactical overweight in equities and underweight in fixed income, favoring large-cap growth and higher-quality bond sectors while remaining cautious on rate-sensitive areas such as MBS.