Federal Reserve Chair Launches 'Homestretch' Update Amid Uncertainty Over Interest Rates
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Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. The stock market is failing to hold onto its morning gains, as Wall Street digests Federal Reserve Chairman Kevin Warsh's speech at the annual Jackson Hole symposium. The S & P 500 is down about 0.25%, while the tech-heavy Nasdaq is off about 0.4%. The Dow industrials are basically flat. Still, it's been a winning week for markets. Treasury yields are higher across the curve, with the market interpreting Warsh's speech — particularly his comment that the Fed has more "work to do" to tame inflation — as hawkish.
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ZeroHedgeUS stock futures are flat and rates rise ahead of today's main event: Fed chief Kevin Warsh’s Jackson Hole speech at 10am ET (full preview here) as traders seek clarity on his economic outlook and his strategy for lowering inflation back to the Fed's 2% target. As of 8:00am ET, S&P futures are little changed and Nasdaq 100 futures are lower following the Nvidia-driven rally for the index in the prior session, when however only 30% of the S&P and 1 of 11 sectors closed green as the index continues to be carried by a handful of AI names while the median stock goes nowhere. Pre-market, Mag 7 stocks are mostly higher led by TSLA (+0.6%) and AMZN (+0.3%); NVDA is the laggard (-0.5%). PayPal slumped 16% in premarket trading after Advent and Stripe abandoned their pursuit of the firm.
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Warsh's first pair of press conferences as Fed chairman left many in the markets uncertain about where he stood on the path of interest rates, prompting bond traders to sell off long-term debt to account for the uncertainty. At a closely watched speech in Jackson Hole, Wyoming on Friday, Warsh showed he had heard those critics. He came as close as he is ever likely to do to indicating he is on the precipice of raising interest rates if inflation doesn't improve, based on his own idiosyncratic reading of price data.
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New York Post BusinessFederal Reserve Chair Kevin Warsh said Friday there may be “work to do” on inflation, though he again danced around his outlook on interest rates during a closely-watched speech at the central bank’s annual Jackson Hole, Wyo., retreat.
FortuneIn his first high-profile speech at the Fed’s annual conference in Jackson Hole, Wyoming, Warsh acknowledged that recent U.S. reports show that inflation has cooled a bit, but “they do not tell me that underlying trends have meaningfully improved.”
MarketWatchKevin Warsh passed another big test as a new Federal Reserve chairman on Friday: He said the central bank still has work to do on inflation, and the bond market took him at his word.
BloombergWarsh Makes Big Promises at Jackson Hole, Experts React Bloomberg's Tom Keene, Lisa Abramowicz, and Michael McKee spoke with a number of financial experts on the sidelines of the Jackson Hole Economic Symposium in Wyoming on Friday, where they broke down the speech from Federal Reserve Chairman Kevin Warsh. In his first appearance as chair from the annual gathering, Warsh said if inflation doesn't meaningfully slow down, policymakers have "work to do." (Source: Bloomberg)
Epoch Times BusinessFederal Reserve Chairman Kevin Warsh is cautious about elevated underlying inflation trends, teasing that higher interest rates could be on the table in the coming months.
ZeroHedgeAs described in our Jackson Hole preview (here) Warsh’s address, scheduled for 10 a.m. New York time, is shaping up as a crucial moment for markets as doubts about his commitment to taming inflation have helped push up long-term yields. A divided policy committee and the Treasury’s bond market intervention are further complicating the backdrop.
Financial TimesWarsh says Fed will have ‘work to do’ if inflation does not fall soon Central bank chair signals rising concerns over persistently elevated price increases
BBC BusinessFederal Reserve chairman Kevin Warsh said while inflation readings looked better than expected over the summer, they did not show that the current picture had "meaningfully improved".
Washington Times BusinessNew Fed Chair Kevin Warsh will deliver a high-profile speech Friday in Jackson Hole, Wyoming, that will be closely watched by Wall Street for any signs of his thinking about next steps.
RealClearMarketsA September Rate Hike? Warsh Sure Sounded Hawkish Tom Lauricella, Morningstar The new Fed chair's Jackson Hole speech appeared focused on strengthening his anti-inflation credentials, economists say.
Politico EconomyWill Kevin Warsh Squander a Huge Opportunity? The new Fed chair will have the spotlight at the central bank’s high-profile conference in Jackson Hole. He should use it.
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“Here is my standard: We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed,” Warsh said. “Otherwise, we have work to do. That’s our job … our mandate … and our charge to keep.” This is a developing story. Please check back for further updates.
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New York Post Business“Here is my standard: We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed,” Warsh said. “Otherwise, we have work to do. That’s our job … our mandate … and our charge to keep.”
Fortune“We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed,” Warsh said. “Otherwise, we have work to do.”
BBC Business"Here is my standard: We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do."
CNBCHe added, "We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do. That's our job . . . our mandate . . . and our charge to keep."
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His tone was firm: “We should not indulge a regime in which market participants are looking primarily to the Fed for their next trade.”
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CNBC"The Fed plays an essential role in the economy and the markets. And our tools are powerful. We determine the path of short-term interest rates. And market participants will always try to anticipate what we will do next," he said. "But we should not indulge a regime in which market participants are looking primarily to the Fed for their next trade."
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Treasury Secretary Scott Bessent said the government would buy back more debt in a bid to lower borrowing costs, but the market's reaction to the announcement has proved short lived.
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CNBCWarsh did not mention in the speech the recent announcement from Treasury Secretary Scott Bessent of accelerated buybacks of government debt, a move that seems contrary to the Fed chair's desire for less government involvement in markets.
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Inflation cooled in June and July after spiking in May from soaring gas prices, yet it remains above the central bank’s target. According to the Fed’s preferred measure, it was 3.7% in July.
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New York Post BusinessIn July, inflation hit 3.4% – down from levels above 4% in May but still stubbornly above the Fed’s 2% goal.
BBC BusinessThe latest figures showed prices rose 3.4% in the year to July, above the Fed's 2% target.
Washington Times BusinessInflation remains elevated and above the Federal Reserve’s target The Commerce Department’s Wednesday report showed that prices rose 3.7% in July compared with a year earlier, the same as June. Inflation has worsened since the U.S. and Israel attacked Iran in late February, when it stood at 2.9%. It’s noticeably above the Fed’s target of 2%.
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Traders anticipate that the central bank chief will discuss artificial intelligence (AI), economic productivity, the 2008 Global Financial Crisis, the monetary policy task forces, the payment system, and Fed independence, according to Polymarket.
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FortuneThe boomerang central banker hit on the topic early, but with questions rather than expectations as to how it might shape the Fed’s mandate. Warsh said: “We recognize that AI is a new variable—potentially a new factor of production—that will have consequences for both the economy and the conduct of monetary policy. It opens some major lines of inquiry: Will the application of AI cause a significant, sustained rise in productivity across the economy? And if so, when?”
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Chicago Fed's Austan Goolsbee Is Still Worried About Inflation, Overheating Why the Chicago Fed president is thinking about the next shock.
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ZeroHedgeAnd Chicago Fed President Goolsbee said he wanted “evidence that this inflation shock is not going to be persistent”, but he also said “I’m OK with waiting as we’re getting that.”
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What traders and Fed-watchers want instead is “vol-reducing: marginally hawkish near term, but fundamentally calming.”
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In previous years, Fed leaders used their keynote addresses as monetary policy resets for the year ahead.
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Independent claims that didn't surface elsewhere in our corpus. Treat as supplementary — not corroborated across outlets.
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01 CNBC The consequences of policy errors, Warsh said, is felt more acutely on Main Street than on Wall Street. Whereas Wall Street can adjust exposure to any Fed missteps — or even look to take advantage of them — Warsh said it is Main Street that gets stuck with the burden of high inflation and/or a less secure job market. The artificial intelligence boom was another big theme in Warsh's speech. It also is a complicating factor in the outlook for interest rates. We are at a "hinge point in history" thanks to AI, Warsh said, with the potential for higher economic growth on the rise. "AI is a new variable. potentially a new factor of production," Warsh said.
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02 Fortune It is frequently said that the Federal Reserve steers by looking in the rearview mirror, basing monetary policy decisions on where the economy was in the past, rather than where it is today, or where it is headed. The reason is simple: the Fed relies heavily on measures that summarize the preceding 12 months. Those measures can be slow to reflect a sharp change in the current inflation run rate.
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03 Financial Times Read: Warsh’s Jackson Hole address
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04 Bloomberg Wall Street Week | Debt & Consequences, Defying Fiscal Gravity, Hollywood Gets Democratized This week, Chrystia Freeland talks with the former finance ministers of the Netherlands and Germany about what it takes to bring spending under control. And, are US deficits now a bigger driver of interest rates than inflation? Plus, as Fed Chair Kevin Warsh makes his debut at the Jackson Hole Economic Policy Symposium, we revisit the story of the wealthiest place in America. Later, the rise of YouTube filmmakers is democratizing discovery, while also flooding the market with more content than audiences can watch. (Source: Bloomberg)
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05 ZeroHedge How much will Kevin Warsh say in Jackson Hole today? That's the question on investors' minds.
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06 Epoch Times Business “They do not tell me that underlying trends have meaningfully improved,” Warsh stated in his prepared remarks.
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07 Washington Times Business The Personal Consumption Expenditures Price Index increased 0.2% for the month or 3.7% on an annual basis, matching the yearly reading in June, according to the Bureau of Economic Analysis.
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08 MarketWatch Market Extra Kevin Warsh gets what every Fed chair hopes for: A bond market that trust his words
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09 New York Post Business In the past, previous Fed chairs – including Warsh’s immediate predecessor, Jerome Powell – have used their appearance in the Teton mountains of Wyoming to deliver major policy announcements.
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10 BBC Business Published The head of the US central bank said policymakers will "have work to do" to if they are not confident cost of living pressures are easing for Americans.
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11 National Review Economy Inflation Update: Still Too High Higher interest rates remain the only solution, however uncomfortable.
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12 NPR Economy NPR's Steve Inskeep speaks with David Wilcox, with the Peterson Institute for International Economics, about what investors and economists are hoping to hear from the Fed chair's speech Friday.
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