September Hike Odds Fall to 33%; Warsh Speaks Friday
U.S. markets are closed for the weekend; the next open is Monday, August 24, at 9:30 a.m. ET (4:30 p.m. in Istanbul).
The week's real test comes Friday in Wyoming: Kevin Warsh delivers his first Jackson Hole address as Fed Chair on Friday, August 28, at about 10:00 a.m. ET (5:00 p.m. in Istanbul); the symposium runs August 27-29 under the theme "Financial Innovation: Implications for Payments and Policy." The weight of the speech comes from the calendar — it lands exactly 19 days before the September 16 FOMC decision and will be Warsh's first extended comment on the rate path. Here is how it is priced: the funds rate sits at 3.50%-3.75% after a fifth consecutive hold in July, and odds of a September hike have fallen from roughly 58% to about 33% since the July employment report, in which nonfarm payrolls fell 23,000 against a consensus of +85,000. Inflation, meanwhile, has not cooperated: headline CPI ran at 3.30% year over year in July, and core PCE — the Fed's preferred gauge — was 3.29% in June. Because 69% of managers in Bank of America's fund manager survey expect a neutral tone, the risk is asymmetric in both directions: what is not priced in is the surprise itself. The long end is not waiting for the Fed either — the 30-year Treasury yield closed Friday near 5.27%, its highest zone since 2007.
The week's first risk arrives Monday morning: Treasury Secretary Scott Bessent will lay out the details of a new Iran sanctions package on Monday at 10:00 a.m. ET (5:00 p.m. in Istanbul), describing it as a "one-two punch" — a naval blockade paired with the harshest economic penalties imposed to date. China, which buys more than 80% of Iran's seaborne oil, has rejected the approach, with an embassy spokesperson saying sanctions "do not help resolve the problem"; the answer from Tehran over the weekend was a senior Iranian military commander vowing the country "will not submit." The price response still points up: Brent settled Friday at $93.64 and WTI at $86.75, both closing a second straight weekly gain.
