Boston Fed President Susan Collins says mixed inflation data still leaves the door open to a rate hike, even as Treasury yields climb ahead of Chair Kevin Warsh's Friday speech at Jackson Hole. Prediction markets see little chance Warsh addresses the bond market directly, but give heavy odds he mentions inflation.
Collins keeps rate-hike door open
Boston Federal Reserve President Susan Collins said Thursday that the latest inflation report showed mixed results, with the headline figure stronger than anticipated but driven by factors she does not see as demand-driven. Speaking at the Fed's annual symposium in Jackson Hole, Wyoming, she pointed to rising portfolio management fees tied to stock values, not supply and demand, as one reason her outlook still tilts toward inflation declining without further policy action.
The Personal Consumption Expenditures Price Index climbed at a 3.7% annual rate in July, above the Fed's target, though Collins said monthly inflation for goods and services with market-determined prices tracked near the 2% goal. She said she stands ready to raise rates if inflation does not decline as anticipated, and that a broad-based increase across market prices would raise greater concern.
Yields climb before Warsh's Jackson Hole speech
Treasury yields rose for a second day as investors awaited Warsh's address. The 30-year yield rose to 5.19% after touching its highest level since 2007 earlier this month. Apollo Global Management chief economist Torsten Slok said the speech could carry a hawkish tone.
Policymakers left the federal funds rate unchanged at 3.5% to 3.75% at their latest meeting, and futures markets price one quarter-point hike by year-end with roughly a one-third chance of a September move. A $44 billion auction of seven-year notes drew solid demand even as yields stayed elevated.
Markets doubt Warsh will address bond market
Prediction-market traders on Kalshi give only 16% odds Warsh mentions the "bond market" in his speech and an 8% chance he says "yield curve," terms that could reference last week's yield highs. Odds are higher, at nearly 90%, that he references inflation.
A CNBC survey found that 45% of respondents do not expect Warsh to expand on the rate outlook at Jackson Hole, and analysts doubt he will hint at the Fed's September decision. Goldman Sachs chief U.S. economist David Mericle said Warsh has been more reluctant than his predecessor to share policy views ahead of a meeting.
Sources: Investing.com, Crypto Briefing, CNBC
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