Last night, Beijing time, after Kevin Warsh’s speech at Jackson Hole, the market’s reaction was very straightforward:

The U.S. dollar index quickly surged to 99.67; gold briefly fell below $4,500 per ounce; the yield on the 2-year Treasuries moved meaningfully higher; the 10-year rose slightly; and the 30-year remained comparatively restrained.

This set of prices tells one thing:

The market has moved the "rate hike risk" back onto the table again.

But what’s really interesting is that Warsh didn’t clearly say "there will be a rate hike." What he said was: if inflation doesn’t return to 2%, the Fed still has more work to do.

That’s a very sophisticated line. It doesn’t promise a rate hike, but it doesn’t rule one out either—no answer to the market, only pressure. And so the probability of a rate hike rose from about 35% to nearly 60%.

When short-term interest rates rise, global capital naturally flows back into the U.S. dollar. As the dollar absorbs liquidity, gold and crypto come under pressure. Because when U.S. Treasury yields turn more attractive, the opportunity cost of holding non-yielding assets like gold and BTC increases.

So last night wasn’t just a simple hawkish move—it was a precise form of expectations management.

I think what Volcker truly wants to do is three things:

Crush the market’s hopes of rate cuts;

Reclaim the Fed’s policy autonomy;

Leave room for future policy by using ambiguous wording.

One more thing is crucial: he put AI into the macroeconomic framework when he spoke.

Compute power, energy, and data centers—no longer just a tech-stock story, but potentially a new factor of production. If AI can truly boost productivity, it will affect America’s potential growth, long-term inflation, and the path of interest rates.

So in the short term, it’s about liquidity; in the long term, it’s about productivity.

Next, don’t just listen to the speeches—watch how prices vote: 2-year Treasury yields, the dollar, gold, oil prices, and BTC.

The market is always more honest than a speech.

Do you think that move last night was hawkish expectations management—or laying the groundwork for renewed rate hikes?