The Fed Just Changed the September Trade - Here’s What Moved Markets

• September Fed rate hike odds jumped from 34% to as high as 61% after Warsh’s Jackson Hole speech.
• Warsh said financial conditions remain unrestrictive as inflation holds at 3.7%.
• Gold, stocks and crypto fell as traders unwound positions built around a Fed hold.

Federal Reserve Chair Kevin Warsh’s Jackson Hole speech quickly reshaped September rate expectations, forcing traders to reprice the risk of a potential hike after entering the event largely positioned for steady borrowing costs. Roughly $2.3 trillion was wiped across gold, silver, U.S. equities and crypto markets.

Before Warsh spoke, the probability of a September hike stood near 34%, while roughly 70% of market pricing favored unchanged rates. A Bank of America survey also showed 69% of fund managers expected Warsh to deliver a neutral message. Those expectations changed after his remarks.

September F…

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