July PCE inflation sits at 3.7% headline and 3.3% core.
July PCE inflation sits at 3.7% headline and 3.3% core. That is the reality Kevin Warsh faces as he travels to Jackson Hole this Friday.
He has dropped standard forward guidance and wants markets to read signals directly. This approach adds uncertainty since inflation remains well above the 2% target.
Warsh suggests higher Treasury yields can tighten financial conditions on their own. Traders are already adjusting positions without explicit instructions from the Fed.
CME FedWatch now shows a 40% chance of a 25bp hike in September. That probability was just 33% a week ago.
Longer-dated bonds reflect this shift since May:
- 10-year yield up 8 basis points
- 30-year yield up 10 basis points
Every speech and data print acts as a catalyst until we understand his true reaction function. Less communication means financial conditions must do the heavy lifting while prices stay high. Do you see this silence as a deliberate policy tool or a lack of consensus?
Sources:
Reuters: https://www.reuters.com/business/anxious-investors-hope-clarity-warshs-fed-plan-jackson-hole-2026-08-26/
WSJ: https://www.wsj.com/economy/central-banking/the-fed-chairman-is-heading-to-jackson-hole-without-a-clear-stance-on-inflation-eed625d3
Not financial advice. For informational and educational purposes only.
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