Warsh's Hawkish Comments Spark Rate Hike Bets and Nasdaq Sell-Off

Federal Reserve Chair Kevin Warsh hinted at further interest rate hikes in his speech at the Jackson Hole Economic Symposium, causing the Nasdaq 100 index to fall by 0.70% to 29,433 points.

Warsh emphasized that the central bank must ensure underlying inflation converges towards its target, as price stability remains its primary mandate. He noted that the labour market is stable and the economy resilient, yet inflation has persisted above target for an extended period.

The CME FedWatch tool displayed a significant shift in market probabilities following Warsh's speech, with a 59.7% implied probability of a potential interest rate hike at the September meeting and a 40.1% single probability of two rate hikes by December.