Warsh's Hawkish Remarks Send Markets into Tailspin

Fed Chairman Kevin Warsh's comments at the Jackson Hole symposium have sent shockwaves through financial markets, pushing interest-rate futures to a 58% chance of a September rate hike, up from 35% just a day earlier.

This sharp repricing reflects a growing concern about inflation, with short-term Treasury yields rising more than longer-dated ones. The move has complicated the recent stabilization in longer-term yields that followed the Treasury's buyback announcement.

Equity investors have largely shrugged off the bond market turbulence, but small caps and industrials underperformed, leading declines in major stock indexes. The S&P 500 remains about 1% below record highs heading into the Fed's September 16 decision.