FICC Weekly Jackson Hole: Mountain Views and Market Views

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FICC Weekly - Jackson Hole: Mountain Views and Market Views

We get Jackson Hole next week, a highly anticipated one because it is Warsh’s first meeting as the Fed Chair, though given the little forward guidance related to anything monetary policy related thus far, what do we expect from his first Jackson Hole speech? We already had a big announcement this week, with the US Treasury increasing their future long-end buyback programme. This is neither QE or yield-curve control, but more an effort to burn the steepeners and compress long-term borrowing costs. We see from the price action since the announcement that it has done little to alter forces that pushed term premia higher in the first place. You still have large fiscal deficits, an earlier ramp-up in corporate supply, hot running growth, easing financial conditions that leave the door open to future inflation pressures and AI-driven productivity lifting the long-run neutral rate.

Last year we had 17 Fed speakers before Jackson Hole. (vs. what looks so far to be just 7 in 2026) . After Jackson Hole the window soon then closes for the 2-week blackout period before the Sep 16 meeting (they’ll be 3 days Aug 31-Sep 2 then blackout!). This might be coincidental, but one wonders whether this is part of the new effort by the Warsh Fed to scale back any form of “guidance”, at least from the Governor side. We are curious about what it might take to flip some of the Governors like Waller, Barr and possibly Powell most obviously. And, if not Powell, Paulson; but none of them are currently scheduled to speak. That means markets will continue to fly in the dark despite the weak payroll report and what we think might be a weaker than consensus CPI report. If that’s the case, Warsh effectively is keeping tight control of his merry band (from US Strategy Konstam).

So far, Warsh has characterised his instatement to the Fed as a ‘regime change’, and for the first time we might see what that entails. A curious choice of a topic as "Financial Innovation: Implications for Payments and Policy” which seems a bit disconnected from the headlines that we have been tracking on the markets side. He recently remarked that he has not made any topical decisions yet but signaled that he will move away from near-term data discussions and address larger structural problems about monetary policy.