Warsh's Hawkish Warning Sparks Rate Hike Expectations as Nvidia Soars
Fed Chair Kevin Warsh delivered a hawkish message on interest rates at the Jackson Hole conference, stating that inflation remains a concern and that the central bank is responsible for 65 months of sustained elevated prices. He reaffirmed the 2% inflation target as 'a firm, fixed target' and noted that the core Personal Consumption Expenditure (PCE) price index is tracking above mandate at 3.7% over the past 12 months and 4.1% over the past six.
The remarks from Warsh led to an immediate repricing of interest rate expectations, with odds of a September Fed interest rate hike jumping to 57.5%, up from 39.9% one week ago and 24% one month ago. The 2-year Treasury yields pushed above 4.30%, and the dollar rebounded.
Nvidia reported its second-quarter fiscal year revenue, which doubled to $96.2 billion, beating consensus estimates by 4.5%. The company guided for 70% revenue growth in fiscal-year 2028, smashing estimates of 40%. Shares closed 8.74% higher on Thursday, the biggest single-session gain since April 2025.