Federal Reserve Chair Kevin Warsh is due to deliver his first keynote since taking office at the Jackson Hole global central banking conference at 10 a.m. U.S. Eastern Time on Friday, which is 10 p.m. in Taiwan. Crypto markets are already on alert.
This is not just another speech about whether the Fed will cut rates. Traders are watching for something else: whether Warsh signals how the central bank views the U.S. Treasury’s newly launched Treasury buyback plan.
Treasury expanded buybacks, but the size remains small
U.S. Treasury Secretary Scott Bessent announced on Aug. 19 that the government would at least double the scale of long-term Treasury buybacks.
- Each operation will increase from $2 billion to at least $4 billion
- The first round will run from Sept. 9 to Nov. 4
- The backdrop is that 30-year yields have risen to their highest level since 2007
Markets have read the move as a clear signal that officials want to suppress long-term borrowing costs. Some have even taken it as a step that could eventually turn into yield curve control, with the Fed buying bonds directly.
But the report said the plan is not quantitative easing and will not inject new money into markets. It also said that $4 billion per operation is tiny compared with the United States’ $40 trillion in federal debt. Without direct Fed participation in bond buying, a sustained decline in yields is seen as highly unlikely.
Bitcoin and gold have already reacted
Hard assets have moved quickly on expectations of fiscal dominance. According to the report, Bitcoin climbed from $64,000 to $80,000 within a week, while gold also jumped on similar expectations of financial repression.
Fidelity Global Macro Director Jurrien Timmer wrote on X that markets are picking up on the risk of fiscal dominance and a slide in Fed independence. He said that if the Treasury wants to push yields lower successfully, buybacks would need to expand sharply. That, in his view, could force the Fed into what he described as a “new twist operation” and put markets on a path toward currency debasement.
Two possible readings of Warsh’s speech
Friday’s speech will test whether that thesis holds.
In the bearish path outlined in the report, Warsh frames the buyback program as routine liquidity management, stresses monetary policy independence, and rules out Fed involvement. That would leave room for Treasury yields and the U.S. dollar to move higher, putting pressure on Bitcoin and gold.
In the bullish path, Warsh leaves a permissive signal toward the Treasury’s approach or keeps the door open to Treasury-Fed coordination. If markets take that as validation of a broader Fed intervention story, the rallies in Bitcoin and gold could continue.
The report reduced the issue to one question: will the Fed stand behind the Treasury, or stand beside it?
Markets do not expect a clear answer
BlockTempo said Warsh has favored saying less and offering limited forward guidance since taking office, leaving pricing to the market.
BNY analysts said that, given his quiet style on forward guidance, Friday is unlikely to bring explicit support for the buyback plan or a clear rate signal. Instead, they expect a higher-level speech focused on his broader reform agenda and the importance of five working groups covering the inflation framework, data, communications, balance sheet policy, and productivity and employment.
What he leaves unsaid may matter most
According to the report, the importance of Warsh’s Jackson Hole debut may lie less in what new policy message he delivers and more in what he chooses not to address.
If he deliberately avoids discussing Treasury-Fed coordination, markets may read that silence as tacit approval and keep the bullish narrative alive for Bitcoin and gold. If he draws a firm line, short-term volatility may follow.