According to BlockBeats, StoneX market analyst Fawad Razaqzada said on August 29 that Fed Chair Warsh's Friday evening Jackson Hole speech was viewed as quite hawkish. Warsh, when it came to forward guidance, said what the market expected: he does not believe in forward guidance, and therefore declined to pre-commit to a September rate hike. Yet that did not stop market participants from speculating that a rate increase could genuinely return to the table. On inflation, Warsh said reining in price pressures remains a clear priority and elaborated on the point at length, while adding that he is confident core inflation is moving toward the Fed's target. Overall, his remarks came across as more hawkish than the market had priced in. During the speech, September Fed pricing was significantly repriced, with the probability of a 25-basis-point hike jumping from 30% to around 50%. Before the September FOMC meeting, one nonfarm payrolls report and one CPI report are still due, along with some secondary data. Under the new chair, Razaqzada noted, the Fed has become more data-dependent. Given that recent U.S. employment reports have missed expectations by sizable margins, any further softness could severely undermine confidence in a September hike.
According to BlockBeats, StoneX market analyst Fawad Razaqzada said on August 29 that Fed Chair Warsh's Friday evening speech at Jackson Hole was viewed as decidedly hawkish. On forward guidance, Warsh delivered what the market expected to hear: he does not believe in forward guidance, so he declined to pre-commit to a September rate hike. That, however, did not stop speculation that another increase could be back on the table.
On inflation, Warsh stressed that fighting price pressures remains a clear priority and laid out the case in some detail. He also added that he is confident core inflation is moving toward the Fed's target. On balance, his remarks were more hawkish than anticipated.
During the Jackson Hole speech, market pricing for the Fed's September decision shifted sharply. The implied probability of a 25-basis-point rate hike jumped from 30% to roughly 50%. Before the September meeting, the Fed will still receive a nonfarm payrolls report and a CPI print, plus some secondary data releases in between.
Under the new chair, Razaqzada noted, the Fed has become more data-dependent. With recent U.S. employment reports coming in below expectations by a wide margin, any further sign of softening could seriously erode market bets on a September hike.
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