Warsh Opens Door to September Rate Hike, Sparking Market Uncertainty

At the annual symposium in Jackson Hole, Wyoming, Federal Reserve Chairman Kevin Warsh signaled that an interest-rate increase as soon as next month is a possibility. This shift sent short-term Treasury yields climbing and injected fresh uncertainty into equity and cryptocurrency markets.

Warsh stated that the central bank's 2% inflation target remains non-negotiable and that policymakers may need to do more 'work' to bring price pressures under control. His remarks represented a more hawkish posture than many investors had anticipated, pushing the probability of a quarter-point hike at the September FOMC meeting to roughly 58%, according to CME Group data.

The two-year Treasury yield jumped following the speech, while longer-dated yields rose more modestly. The 30-year bond settled at 5.207% on Friday, down from 5.266% before the Treasury Department's surprise buyback announcement last week, according to Tradeweb.