I’m watching the reaction from Jackson Hole, and Fed Chair Kevin Warsh is sending a much more hawkish message than markets wanted to hear.
Warsh made it clear that inflation remains the Fed’s main concern, saying the central bank’s “predominant focus” should be getting inflation back toward its target.
He also delivered a blunt warning: “We have work to do.” According to Warsh, the Fed must be confident that underlying inflation is moving toward its objective “clearly and at sufficient speed.”
That tone immediately hit risk assets. Bitcoin slipped toward $78,700, U.S. stocks moved modestly lower, while Treasury yields edged higher.
Markets are now pricing a 42% probability of a September rate hike, up from 35% a day earlier, according to CME FedWatch.
What makes this more interesting is the tension around long-term bond yields. Treasury Secretary Scott Bessent has suggested intervention may be needed to push long-term rates lower, while Warsh has argued that markets should largely determine where rates go.
For crypto, the takeaway is simple: if the Fed stays focused on inflation rather than rushing toward easier policy, liquidity could remain tighter for longer.
Jackson Hole just reminded markets that the fight against inflation isn’t over yet.