Bloomberg Surveillance · Wednesday, September 2, 2026
Kelly Kowalski observed that Federal Reserve Chair Warsh's Jackson Hole speech, intended to critique forward guidance, was interpreted by the market as forward guidance, leading to a high probability priced in for a September rate hike. She noted this puts the Fed in a difficult position depending on upcoming economic data.
“I think what's interesting about his comments last week is that he spent a lot of time critiquing forward guidance, and yet the market took his comments as forward guidance. And now we're staring at a two-thirds probability of a hike in September.”
“And I think he set himself up and really put himself in a position because going into that speech, You didn't want to sound too dovish, right? The long end's already been selling off.”
“And now we're set up, markets are going into September, pricing a hike. So I think he's a little bit backed into a corner, depending on what happens with the jobs number Friday, depending on what happens with CPI next week, where if you don't hike, again, you risk sort of that July 2.0 and more sell-off in the long end.”