Federal Reserve Chairman Kevin Warsh delivers his first Jackson Hole speech on Friday, and investors are watching less for rate guidance than for any comment on Treasury Secretary Scott Bessent's bond-market intervention. Prediction markets give the topic long odds, while regional Fed presidents have staked out their own views on rates and inflation ahead of his remarks.
Kevin Warsh takes the stage at the Jackson Hole Economic Policy Symposium at 3pm UK time (10am Eastern) on Friday, his first appearance there since becoming Fed chairman. Investors want to know how he views Bessent's recent bond-buying, which is aimed at pushing down long-term borrowing costs, more than they want fresh rate signals.
Bessent's bond-market move puts pressure on the Fed
Bessent has been buying long-dated Treasury bonds to push down long-term borrowing costs, and the move appears to put the Treasury on a collision course with the Fed, since lower borrowing costs could undermine the fight against inflation. Yet prediction markets see little chance Warsh addresses it directly: traders put just a 16% chance he mentions the "bond market" and an 8% chance he says "yield curve."
Low expectations for policy signals
A CNBC survey found that 45% of respondents do not expect Warsh to expand on the rate outlook, and analysts also doubt he will hint at next month's decision. That fits his pattern: Warsh has said he doesn't see forward guidance as useful outside of crises, and in July he said he still hadn't decided whether he wanted a big-picture speech or something more traditional. Danske Bank likewise expects him to continue providing little to no forward guidance on Friday.
Regional Fed presidents stake out their own views
Ahead of the speech, Cleveland Fed President Beth Hammack told CNBC: "now is the time to act" on raising interest rates, while Kansas City Fed President Jeff Schmid described inflation as stubborn and sticky.
Markets hold steady ahead of the speech
Wall Street closed higher on Thursday after Nvidia added more than $400 billion in market value following strong earnings, but US futures were broadly flat Friday morning. The 10-year Treasury yield continued to range-trade between 4.60% and 4.75%, leaving traders with little to do but wait for Warsh to take the podium.
Sources: The Guardian, CNBC, ActionForex
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