Markets want Warsh to reveal his frameworks, but he will likely settle for a balanced speech. Both options would be better than a speech anchored only on digital payments (this year's symposium theme). We see three paths that Warsh can take:
Option 1: Keeps it digital (and disappointing)
Option 2: Balanced speech, macro in passing
Option 3: Warsh’s framework revealed
Market Implications:
Rates have been chopping around in a range but grinding lower in the trading sessions heading into the event. If we get a neutral-ish Jackson Hole outcome (which might be what Warsh wants), markets could give back some recent gains. However, we don’t see a big sell-off in rates with month-end just around the corner.
On the other hand, if there is very little viewpoint shared, rates could come under pressure again. Alternatively, one could hope for clarity on what is happening at the Fed. If the framework(s) is revealed, equity & bond markets would rally hard into month-end.
Download the PDF to read the full write up covering our latest macro assessment (with a forward-looking timeline of upcoming key events), the drivers of our Fed view, and how markets have historically performed around Jackson Hole Symposiums…