Jackson Hole Volatility Rises as Markets Await Warsh's Guidance

The annual Jackson Hole symposium is underway, and traders are eagerly awaiting Federal Reserve Chair Kevin Warsh's first speech. Expectations for a rate decision announcement have been tempered, with markets instead seeking clarification on how the new Fed leadership will operate.

Historically, the event has seen volatility rise sharply on speech day, while directional returns across major currencies have been inconsistent. Since 1998, there have been several notable instances where Jackson Hole speeches have moved markets significantly, such as Greenspan's 1998 address, which saw a daily range of over 2% in the DXY.

Current market expectations are finely balanced between no further tightening and one final move higher. Fed funds futures imply a 35% chance of a September hike and around 66% by December. A hotter or softer PCE inflation print ahead of Warsh's speech could shift rate expectations sharply.