Investors who began 2026 hoping for a year of gently rising markets and subdued volatility will by now be disappointed.

Two months ago, this column argued that "crunch time" for markets was coming and that "storm clouds were gathering". Regrettably, that is roughly what has transpired since. Furthermore, there is little reason to think the weather is about to clear.

At least three dynamics are creating this maelstrom. The first is the arrival of Kevin Warsh at the Federal Reserve and the inaugural rate decision of his tenure, announced at a press conference last week. Many had expected him to be unconventional, even purposefully obdurate. They were not let down.

The revealing moment came midway through the press conference. Prices, Warsh observed, had begun to respond in real time to market data instead of waiting for comments from the Fed, and the withdrawal of forward guidance was, according to him, a factor. Market participants, he said, were learning to "play the ball, not the referee", and prices would move in whatever direction and by whatever magnitude investors saw fit. He clearly considered this a change for the better.

Set aside the debate on forward guidance, over which even experts on monetary policy differ. The metaphor is critical, because it reveals how the new chair sees the role of...