Trading Week Wrap Up! - 08/28/26

Another trading week is in the books...

And today, we may have gotten our clearest look yet at how Kevin Warsh intends to run the Federal Reserve.

In his first Jackson Hole keynote as Fed Chairman, Warsh delivered a message Wall Street had been waiting for—giving investors important insight into how he views inflation, interest rates, employment, artificial intelligence and the future direction of monetary policy.

And there was one message that came through loud and clear:

The fight against inflation isn't over.

Warsh reiterated that the Federal Reserve's 2% inflation objective is a firm target, pushed back against the idea that recent softer inflation readings necessarily represent a meaningful change in trend, and warned that if inflation isn't moving toward that objective quickly enough...

The Fed still has "work to do."

Markets immediately took notice.

Treasury yields moved higher, the dollar strengthened, and expectations for another potential interest-rate hike increased as traders digested what Warsh's comments could mean for the September FOMC meeting.

But today's speech went much deeper than simply "rates up or rates down."

We'll break down:

• Warsh's inflation warning – Why price stability appears to be the Fed's predominant concern right now
• Interest rates – Did Warsh just open the door wider to another rate hike?
• The labor market – Why Warsh doesn't appear convinced that softer employment data automatically means the economy is weakening
• The death of forward guidance? – Warsh wants a "quieter Fed" that spends less time telling Wall Street what it intends to do next
• AI and productivity – Why artificial intelligence could dramatically alter economic growth, employment and ultimately monetary policy
• The bond market – What today's move in Treasury yields tells us about how investors interpreted the speech
• Stocks & risk assets – What a potentially more hawkish Federal Reserve could mean for the S&P 500, Nasdaq, technology and crypto
• September's FOMC meeting – What traders should be watching between now and the next rate decision

One of the most fascinating parts of Warsh's message may be his philosophy toward the relationship between the Federal Reserve and Wall Street.

For years, traders have parsed every Fed speech looking for clues about the central bank's next move.

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