#FedRateHikeOddsRise

The Jackson Hole speech from Fed Chair Warsh has shifted the market’s baseline. September rate hike odds moved from roughly 30 percent to 57 percent after the remarks were absorbed. Former Fed Vice Chair Kohn described the change as a reversal of the previous policy logic: the default is now to hike unless the data clearly prove otherwise. The September 11 CPI print has become the immediate reference point for the next decision.

That framing is different from the more data-dependent and relatively patient stance that markets had grown used to. A default-to-hike posture raises the bar for any pause or cut and puts more weight on incoming inflation and labor numbers. In practical terms it means the front end of the curve, the dollar, and rate-sensitive equities will stay more reactive to every data release between now and the next FOMC meeting.

The bullish case for risk assets would require the September 11 CPI to come in soft enough to pull the hike odds back down and re-establish a more patient path. In that scenario the dollar could soften and high-duration names could catch a bid again. The bearish case is a firm CPI print that confirms the hawkish tilt and keeps the 57 percent (or higher) probability intact. That outcome would likely keep financial conditions tighter and pressure the same rate-sensitive corners of the market.

I am treating the September 11 CPI as the next hard catalyst and the current 57 percent hike probability as the working baseline. Until that number is released, size stays measured and positioning stays light. The speech has changed the tone; the data will decide whether the market has to reprice further.

Do you think the Fed will actually move in September, or will the CPI give them enough room to stay on hold? Share your read.

‍#JacksonHole #FedPolicy