The Federal Reserve's ambiguous statements, such as needing inflation to move at a "sufficient speed," are not poor communication but a calculated tactic. This approach, similar to a football team disguising a play, keeps their options open for future rate decisions, forcing markets to price in significant uncertainty.
While massive AI infrastructure spending by hyperscalers seems certain, the methods for financing it are not. This ambiguity, with a wide menu of options from bonds to private capital, creates spillover risk and uncertainty for other markets, including Treasury yields, which may not be fully appreciated by investors.
While ambiguity is valuable for those 'calling the plays' like the Fed, it creates risk for investors who must price it. Current low levels of expected volatility suggest the market is not paying investors enough for this uncertainty, creating a dangerous mismatch between risk and reward across macro markets.