The outbreak of Warsh

Send us Fan Mail◆ Powell Fed era ends with split decision ◆ Bank capital to lead Gulf bond revival ◆ SSAs, corporates and FIG face busy May President Trump appointed Jay Powell as Federal Reserve chair — then hounded him continually to ease monetary policy and ended up launching a criminal investigation against him. What could possibly go wrong for Kevin Warsh?The central question for markets is whether he will have an independent mind or be Trump’s puppet. So far, Warsh is getting the benefit of the doubt. After 62 days without a public bond deal from the Gulf, Emirates NBD reopened the market, surprising observers by bringing a deeply subordinated additional tier one capital deal. It could be more than a one-off. A lot of banks in the region have capital securities to call and replace, and these are likely to bulk large as issuance gets back into gear.Across the public sector, financial institution and corporate bond markets, May is set to be exceptionally busy with issuance, but each sector is taking the prospect in a different way.Corporates are gung-ho, while SSAs are still gripped by the urge to avoid risk by funding as much as possible early. Financial instutions have borrowing to catch up on, but are close to a cliff edge. Spreads are ultra-tight, but nasty spectres could easily spook the market.