Warsh's Hawkish Jackson Hole Speech Lifts September Hike Odds — SkimNews
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Warsh's Jackson Hole speech surprised markets with its hawkish lean, pushing fed funds futures to price a 60.4% chance of a September quarter-point hike, up from roughly 56% on Friday per CME's FedWatch tool
- Deutsche Bank said it continues to expect the Fed to deliver 50 basis points of hikes this year across the September and December FOMC meetings following the speech
- Miller Tabak's Matthew Maley pushed back, arguing there is "no empirical basis for the rate hike" and that Warsh is "talking up inflation so that he can claim credit for taming it" when headline measures come down, citing weak labor market data
- Gavekal Research flagged an emerging policy clash, noting that Warsh's insistence on short-term rates as the Fed's main tool puts the central bank "at odds with the US Treasury," which earlier in August announced stepped-up buybacks of long-term Treasuries to cap long-end yields
- Tiger Brokers' James Ooi read Warsh's emphasis on the 2% inflation target as an effort to reinforce the Fed's independence and credibility against fiscal pressures, which reduced the case for near-term cuts
- Gold fell and Asian stocks declined Monday as Susquehanna noted Warsh's dollar-supportive stance reversed part of gold's roughly 14% August rally — its strongest monthly gain this century
Why it matters: Gold's 14% August rally reversed on the speech, showing how quickly Warsh's hawkish pivot can unwind crowded trades when policy shifts. The Fed is now explicitly pulling in the opposite direction from Treasury on duration — Warsh shortening the Fed's balance sheet while Treasury steps up long-end buybacks — a tension Gavekal flagged that complicates both sides' rate path narratives.
Ask SkimNews
