Warsh's Jackson Hole Silence May Push Long-Term Rates Much Higher

Kevin Warsh’s Jackson Hole speech is a pivotal opportunity to demonstrate true policy independence amid Treasury efforts to manage the yield curve. Long-end rates have remained rangebound for years; recent inflation data shows underlying improvement, despite headline risks from oil and capex-driven supply constraints. Policy isn’t tight enough for a rapid return to target inflation, but inflation expectations remain well anchored, and trimmed mean measures are trending lower. Warsh’s optimal strategy is neutrality—avoiding forward guidance or alignment with the Treasury, letting market reactions dictate the next policy move.

Fed Chair Kevin Warsh may find himself in an uncomfortable position heading into Jackson Hole this week, now that the Treasury Secretary has recently expanded its bond buyback operation with 10- and 30-year rates rising. The hard part for Warsh

Michael Kramer is the founder of Mott Capital Management - and is a long-only investor who focuses on macro themes and studies trends and options activities to identify and assess entry and exit points for investments in his long-term focused thematic growth strategy. He is a former buy-side trader, analyst, and portfolio manager with 30 years of experience tracking market technicals, fundamentals, and options.Michael Kramer leads the investing group Reading the Markets, where he helps a devoted following of members to better understand what is driving trading and where the market is likely heading, both the short and long-term. Features of the investing group include: daily written commentary and videos analyzing the driving factors behind price action; general macro trend education to help members make well-informed decisions based on market conditions, interest rates, currency movements and how they all interact; chat for questions and community dialogue; and regular Zoom videos sessions to discuss current ideas and answer questions. The level of access RTM subscribers and the expertise of the source are unprecedented given that the subscription price is a fraction of similar technical coaching and mentoring services. Learn more.