#沃什年度讲话前瞻紧盯利率信号 Markets are holding their breath! What will Fed Chair Warsh say at the global central bankers’ conference?
This year’s Jackson Hole global central bankers’ conference will be held from August 27 to 29, under the theme “Financial Innovation: Implications for Payments and Policy.” Fed Chair Kevin Warsh will deliver his first speech since taking office at 10:00 a.m. ET on August 28 (10:00 p.m. Beijing time on August 28).
Markets will closely watch his comments on the inflation outlook and the path of monetary policy. This is his first major speech as Fed chair and another test of his communication style. At the press conference following the Fed’s July meeting, he was criticized by market participants for being insufficiently candid about his economic views. It was also his new communication approach that first triggered the current sell-off in U.S. Treasuries.
Last week, U.S. Treasury Secretary Bessent unexpectedly announced a plan to buy back long-term Treasuries to lower yields, but the effort had little effect. Against this backdrop, the environment facing Warsh has become increasingly awkward and complex. Warsh is facing continued pressure from Wall Street to provide greater transparency and communication regarding the Fed’s policy actions, with critics saying he has gone too far in restricting the Fed’s communications.
Warsh’s defenders argue that the market’s reaction to his July press conference was somewhat excessive, and that this was simply part of his efforts to reform the Fed. In any case, the market expects Warsh, in his Jackson Hole debut, to reiterate inflation risks and retain the option of raising rates to rebuild policy credibility, while continuing to reiterate his long-standing view that the Fed should reduce its direct influence over market guidance through policy.
Will he “break with” the past?
Market participants generally believe that Warsh’s first major speech as Fed chair will be another test of his streamlined communication style. The challenge facing Warsh is how to rebut market criticism that he has been insufficiently candid about the economy without entirely abandoning his determination not to “feed investors clues about future policy actions.” At the press conference following the July meeting, he said the direction of his Jackson Hole speech had not yet been determined and listed two possibilities: first, focusing on long-term macro issues such as productivity, demographics, and the global economy; or second, directly addressing the near-term policy outlook from September to December. A Bank of America survey of fund managers showed that 69% of respondents expected Warsh to adopt a “neutral” tone in his speech, and this expectation had already been priced in. Respondents said the backdrop to the meeting and speech was striking, including a U.S. Treasury rescue effort that failed within 48 hours, the 30-year Treasury yield hovering near a 19-year high, and the Federal Open Market Committee (FOMC) divided internally by the most “hawkish” dissenting vote in nearly a decade. Some market participants believe he needs to compromise.
Anwiti Bahuguna, co-chief investment officer at Northern Trust Asset Management, said, “It is clear that Warsh does not want to say too much. But for the market, some transparency and basic communication about why you are here and what you are observing at present are entirely reasonable.”
In a research report published on August 24, Bank of America strategist Mark Cabana said the market’s recent “pressure campaign” might enable Warsh to “break with” his former self. Citing boxing champion Mike Tyson’s famous saying, “Everyone has a plan until they get punched in the face,” he said the Treasury market’s continued “heavy blows” against Warsh had made it difficult for him to continue avoiding policy statements. He expects Warsh to draw on the recent communication style of other Fed officials and explain the policy response under two scenarios: if the recent disinflation process continues, maintain the current stance; if inflation remains elevated, clearly state that the Fed is prepared to resume rate hikes. Such a framework-based statement could effectively convey the policy reaction function without committing to a specific path.
Warsh’s defenders also said the market’s reaction to his July press conference had been overblown. Inflation expectations had moved only slightly and remained broadly consistent with the Fed’s 2% target. They also believe the surge in Treasury yields was driven by a combination of factors, including a sharp increase in government and corporate borrowing, rather than being caused by Warsh alone.
Jonathan Millar, Barclays’ senior U.S. economist, told Yicai earlier that he expected Warsh not to provide short-term policy guidance, but that the market would focus on how the FOMC brings inflation back to its 2% target. Warsh is very likely to say that rate hikes are possible if inflation does not improve, thereby reinforcing the market’s pricing of that possibility. Warsh may still reiterate his call for the Fed to reduce its use of forward guidance because he believes it was a source of past policy errors. He may also offer insights into balance-sheet policy.“
“Warsh has long vowed to eliminate forward guidance, believing that guidance was responsible for past policy errors. In his view, forward guidance caused policymakers to become overly constrained by their earlier, outdated forecasts, making policy slow to respond to the latest information,” Millar said. “In Warsh’s view, the market should pay less attention to the Fed’s forecasts and more attention to economic fundamentals. Therefore, by reducing forward guidance, market signals will better reflect their views of the economy and reduce contamination from expectations about future policy.” Randall Kroszner, a professor of economics at the University of Chicago and a Fed governor from 2006 to 2009, said Warsh had merely initiated a communications reform aimed at changing the Fed’s role in guiding monetary policy and dominating markets. “Markets can sometimes be wrong. When I was at the Fed, the market also made many pricing mistakes. And whenever a new approach is introduced, there are always some problems at the beginning,” he said.
Risk events for Treasuries and the dollar
The market also regards Warsh’s debut as the most critical risk event for the current trajectory of Treasuries and the dollar. Against the backdrop of the Treasury Department, led by Bessent, stepping up purchases of long-term Treasuries and the dollar remaining under pressure, whether Warsh can clearly signal a commitment to fighting inflation is seen as directly determining the direction of the 30-year Treasury yield. Cabana said that amid increased Treasury purchases of long-term debt and a pressured dollar, clear signals from Warsh that inflation must be contained and rate hikes resumed if necessary would help stabilize the market and flatten the yield curve. Conversely, if he continues to avoid clear policy statements and fails to clearly explain the inflation outlook and monetary policy reaction function, the 30-year Treasury yield could continue to surge, while the dollar would face another round of downward pressure.
Specifically, Bank of America outlined two clear market scenarios.
Scenario one: Warsh delivers a rate-hike signal as expected, clearly stating that he is willing to resume rate hikes if inflation does not fall. In this case, Bank of America expects the pricing for a rate hike at the September FOMC meeting to rise from the current approximately 9 basis points to 12.5 basis points. Total pricing for rate hikes in this cycle would rise from approximately 40 basis points to nearly 50 basis points. Nominal and real yield curves would flatten, while the dollar could recover some of its losses.
Scenario two: Warsh avoids policy statements, with his speech focusing on structural narratives such as productivity and AI-driven disinflation, or reiterating his opposition to forward guidance. In this case, Bank of America said the market might interpret it as a dovish signal, triggering further steepening of the curve. The 30-year Treasury yield could continue to surge, breaking above 5.5%, while the dollar would face another round of selling pressure.
Millar also told reporters that regardless of whether the Fed changes its communication approach, market participants have no choice but to form expectations about the future path of policy rates. Without any communication, the market may be more likely to misunderstand policymakers’ intentions, potentially leading to greater rate volatility and higher term premiums. For some, increased volatility is simply a feature rather than a flaw. “For investment institutions like ours, volatility caused by genuine uncertainty is entirely reasonable, but volatility caused by a lack of information is suboptimal,” he analyzed. Historically, the Jackson Hole global central bankers’ conference has usually had a limited impact on the Treasury market.
According to Bank of America statistics, since 2010, the 10-year Treasury yield has generally edged lower after the conference, but usually rebounded within 10 trading days. The dollar has behaved similarly, often weakening slightly around the conference but typically recovering its losses over the following several weeks. However, 2025 was an exception. At that time, the Fed’s emphasis on downside risks to the labor market triggered a sustained decline in yields and a marked weakening of the dollar.
Bank of America warned that this year’s backdrop differs from that of previous conferences: the U.S. Treasury Department has already intervened to influence long-end yields, and the ball has now been passed to Warsh. At this special moment, if Warsh fails to meet the market’s minimum expectations for policy credibility, this year’s conference could have the most profound impact on markets in recent years.
This year’s Jackson Hole global central bankers’ conference will be held from August 27 to 29, under the theme “Financial Innovation: Implications for Payments and Policy.” Fed Chair Kevin Warsh will deliver his first speech since taking office at 10:00 a.m. ET on August 28 (10:00 p.m. Beijing time on August 28).
Markets will closely watch his comments on the inflation outlook and the path of monetary policy. This is his first major speech as Fed chair and another test of his communication style. At the press conference following the Fed’s July meeting, he was criticized by market participants for being insufficiently candid about his economic views. It was also his new communication approach that first triggered the current sell-off in U.S. Treasuries.
Last week, U.S. Treasury Secretary Bessent unexpectedly announced a plan to buy back long-term Treasuries to lower yields, but the effort had little effect. Against this backdrop, the environment facing Warsh has become increasingly awkward and complex. Warsh is facing continued pressure from Wall Street to provide greater transparency and communication regarding the Fed’s policy actions, with critics saying he has gone too far in restricting the Fed’s communications.
Warsh’s defenders argue that the market’s reaction to his July press conference was somewhat excessive, and that this was simply part of his efforts to reform the Fed. In any case, the market expects Warsh, in his Jackson Hole debut, to reiterate inflation risks and retain the option of raising rates to rebuild policy credibility, while continuing to reiterate his long-standing view that the Fed should reduce its direct influence over market guidance through policy.
Will he “break with” the past?
Market participants generally believe that Warsh’s first major speech as Fed chair will be another test of his streamlined communication style. The challenge facing Warsh is how to rebut market criticism that he has been insufficiently candid about the economy without entirely abandoning his determination not to “feed investors clues about future policy actions.” At the press conference following the July meeting, he said the direction of his Jackson Hole speech had not yet been determined and listed two possibilities: first, focusing on long-term macro issues such as productivity, demographics, and the global economy; or second, directly addressing the near-term policy outlook from September to December. A Bank of America survey of fund managers showed that 69% of respondents expected Warsh to adopt a “neutral” tone in his speech, and this expectation had already been priced in. Respondents said the backdrop to the meeting and speech was striking, including a U.S. Treasury rescue effort that failed within 48 hours, the 30-year Treasury yield hovering near a 19-year high, and the Federal Open Market Committee (FOMC) divided internally by the most “hawkish” dissenting vote in nearly a decade. Some market participants believe he needs to compromise.
Anwiti Bahuguna, co-chief investment officer at Northern Trust Asset Management, said, “It is clear that Warsh does not want to say too much. But for the market, some transparency and basic communication about why you are here and what you are observing at present are entirely reasonable.”
In a research report published on August 24, Bank of America strategist Mark Cabana said the market’s recent “pressure campaign” might enable Warsh to “break with” his former self. Citing boxing champion Mike Tyson’s famous saying, “Everyone has a plan until they get punched in the face,” he said the Treasury market’s continued “heavy blows” against Warsh had made it difficult for him to continue avoiding policy statements. He expects Warsh to draw on the recent communication style of other Fed officials and explain the policy response under two scenarios: if the recent disinflation process continues, maintain the current stance; if inflation remains elevated, clearly state that the Fed is prepared to resume rate hikes. Such a framework-based statement could effectively convey the policy reaction function without committing to a specific path.
Warsh’s defenders also said the market’s reaction to his July press conference had been overblown. Inflation expectations had moved only slightly and remained broadly consistent with the Fed’s 2% target. They also believe the surge in Treasury yields was driven by a combination of factors, including a sharp increase in government and corporate borrowing, rather than being caused by Warsh alone.
Jonathan Millar, Barclays’ senior U.S. economist, told Yicai earlier that he expected Warsh not to provide short-term policy guidance, but that the market would focus on how the FOMC brings inflation back to its 2% target. Warsh is very likely to say that rate hikes are possible if inflation does not improve, thereby reinforcing the market’s pricing of that possibility. Warsh may still reiterate his call for the Fed to reduce its use of forward guidance because he believes it was a source of past policy errors. He may also offer insights into balance-sheet policy.“
“Warsh has long vowed to eliminate forward guidance, believing that guidance was responsible for past policy errors. In his view, forward guidance caused policymakers to become overly constrained by their earlier, outdated forecasts, making policy slow to respond to the latest information,” Millar said. “In Warsh’s view, the market should pay less attention to the Fed’s forecasts and more attention to economic fundamentals. Therefore, by reducing forward guidance, market signals will better reflect their views of the economy and reduce contamination from expectations about future policy.” Randall Kroszner, a professor of economics at the University of Chicago and a Fed governor from 2006 to 2009, said Warsh had merely initiated a communications reform aimed at changing the Fed’s role in guiding monetary policy and dominating markets. “Markets can sometimes be wrong. When I was at the Fed, the market also made many pricing mistakes. And whenever a new approach is introduced, there are always some problems at the beginning,” he said.
Risk events for Treasuries and the dollar
The market also regards Warsh’s debut as the most critical risk event for the current trajectory of Treasuries and the dollar. Against the backdrop of the Treasury Department, led by Bessent, stepping up purchases of long-term Treasuries and the dollar remaining under pressure, whether Warsh can clearly signal a commitment to fighting inflation is seen as directly determining the direction of the 30-year Treasury yield. Cabana said that amid increased Treasury purchases of long-term debt and a pressured dollar, clear signals from Warsh that inflation must be contained and rate hikes resumed if necessary would help stabilize the market and flatten the yield curve. Conversely, if he continues to avoid clear policy statements and fails to clearly explain the inflation outlook and monetary policy reaction function, the 30-year Treasury yield could continue to surge, while the dollar would face another round of downward pressure.
Specifically, Bank of America outlined two clear market scenarios.
Scenario one: Warsh delivers a rate-hike signal as expected, clearly stating that he is willing to resume rate hikes if inflation does not fall. In this case, Bank of America expects the pricing for a rate hike at the September FOMC meeting to rise from the current approximately 9 basis points to 12.5 basis points. Total pricing for rate hikes in this cycle would rise from approximately 40 basis points to nearly 50 basis points. Nominal and real yield curves would flatten, while the dollar could recover some of its losses.
Scenario two: Warsh avoids policy statements, with his speech focusing on structural narratives such as productivity and AI-driven disinflation, or reiterating his opposition to forward guidance. In this case, Bank of America said the market might interpret it as a dovish signal, triggering further steepening of the curve. The 30-year Treasury yield could continue to surge, breaking above 5.5%, while the dollar would face another round of selling pressure.
Millar also told reporters that regardless of whether the Fed changes its communication approach, market participants have no choice but to form expectations about the future path of policy rates. Without any communication, the market may be more likely to misunderstand policymakers’ intentions, potentially leading to greater rate volatility and higher term premiums. For some, increased volatility is simply a feature rather than a flaw. “For investment institutions like ours, volatility caused by genuine uncertainty is entirely reasonable, but volatility caused by a lack of information is suboptimal,” he analyzed. Historically, the Jackson Hole global central bankers’ conference has usually had a limited impact on the Treasury market.
According to Bank of America statistics, since 2010, the 10-year Treasury yield has generally edged lower after the conference, but usually rebounded within 10 trading days. The dollar has behaved similarly, often weakening slightly around the conference but typically recovering its losses over the following several weeks. However, 2025 was an exception. At that time, the Fed’s emphasis on downside risks to the labor market triggered a sustained decline in yields and a marked weakening of the dollar.
Bank of America warned that this year’s backdrop differs from that of previous conferences: the U.S. Treasury Department has already intervened to influence long-end yields, and the ball has now been passed to Warsh. At this special moment, if Warsh fails to meet the market’s minimum expectations for policy credibility, this year’s conference could have the most profound impact on markets in recent years.
