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Warsh boosts rate-hike bets after Jackson Hole speech

Two-year Treasury yields jumped 12 basis points to 4.35% after Warsh reiterated his push to bring inflation down.

Reported · Written up by our desk · Central Banks

Federal Reserve Chairman Kevin Warsh used his Jackson Hole speech to underscore a hardline stance against inflation running above the central bank’s target, helping shift bond markets toward stronger expectations for tighter policy, according to LiveMint Markets.

After Warsh spoke, two-year Treasury yields rose 12 basis points to 4.35%, the biggest single-day move since his similarly hawkish posture following an earlier meeting in June. Traders also increased bets that a quarter-point rate hike next month is more likely than not, while the US dollar rallied and gold fell.

LiveMint Markets reports that 30-year yields were largely unchanged, a pattern that investors read as consistent with the Fed acting over time to cool inflation and keep long-term borrowing costs under control. The speech also added to volatility in an environment where long-dated Treasury yields had been climbing after hitting nearly two-decade highs.

The outlet notes Warsh’s appearance came alongside Nvidia’s earnings as a key driver of the week’s market tone, with concerns building after 30-year yields reached the highest levels since 2007. It also points to earlier efforts by Treasury Secretary Scott Bessent to support yields, alongside renewed questions about whether the Fed’s preferred inflation measure remains the right target.

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