Overview
- Kevin Warsh is making his first Jackson Hole appearance this week and has sharply reduced the Fed’s use of forward guidance so officials will give fewer explicit hints about future rate moves.
- Treasury Secretary Scott Bessent announced a plan to at least double buybacks of long-term Treasuries, prompting investors to see the Treasury as actively trying to push down long-term yields.
- Analysts warn the Treasury intervention could obscure the price signals in the Treasury market that Warsh wants the Fed to use as part of a market-led reaction function.
- Long-term yields have risen to multi-decade highs while U.S. public debt has topped $40 trillion, increasing the sensitivity of mortgage rates, corporate borrowing costs, and market expectations of Fed action.
- Markets expect Warsh to offer modest cues on communication or balance-sheet policy at Jackson Hole but not explicit short-term rate guidance before the September 16 FOMC, making this speech a key test of his credibility and independence.