Forex
Warsh Signals Rate Hike Probability Surges as US Borrowing Costs Rise
US borrowing costs rose after Federal Reserve Chairman Kevin Warsh hinted at a possible interest rate increase in September. Speaking at the Fed's Jackson Hole summit, Warsh indicated that inflation trends have not improved sufficiently, suggesting the central bank may need to act. Market participants interpreted his remarks as opening the door to higher rates.
The yield on two-year US government bonds jumped nearly 0.1 percentage point to 4.33%, the largest one-day increase since June. Pricing now implies a 60% probability of a rate hike in September, up from 34% before Warsh's speech.