MUFG Research discusses the the testimony 0f Kevin Warsh's  to the Senate Banking Committee in Congress yesterday. 

"His comments on balance sheet policy were perhaps a little stronger and more explicit than expected and firmly now strengthens the prospect of balance sheet shrinkage under a Warsh-led Federal Reserve...What was also interesting yesterday was the strong message on guidance. Warsh doesn’t like guidance and that spells the end of two current aspects of Fed policy," MUFG notes.

"So, both the signals from Warsh on Fed balance sheet policy and on providing forward guidance indicate to us the potential for a steeper Treasury yield curve and a weaker USD," MUFG adds.