Markets were in a tailspin earlier this week after Kevin Warsh, an inflation hawk, was nominated to lead the Federal Reserve. But the views of the incoming Fed chair are more nuanced than the market reaction suggests. Here’s why – and what it means for your portfolio.

I missed the action. What made markets so volatile?

On January 30, US President Donald Trump nominated Kevin Warsh as the next Federal Reserve Chair, precipitating seismic moves across asset classes. The markets had expected someone more dovish to get the job, given the Administration’s preference for lower financing costs. For Janus Henderson, the nomination represents “one of the most consequential” Fed chair appointments in over a decade. Appointing Warsh, an inflation hawk, signals a potential departure from the largely accommodative monetary policy framework that has characterised Fed policy since the Global Financial Crisis in 2008. The most dramatic reaction was...