Kevin Warsh will step to the podium at the Kansas City Fed’s Jackson Hole symposium in Wyoming on Friday to deliver his first major address as chair of the Federal Reserve, an appearance investors hope will finally clarify where US monetary policy is heading.
Warsh, confirmed by the Senate in a narrow 54-45 vote in May, the tightest margin for a Fed chair in US history, succeeded Jerome Powell at a moment of persistent inflation and growing unease over the central bank’s next moves. According to CNBC, he has since adopted a communication style markedly more guarded than his predecessors, leaving markets guessing.
A test of transparency
A CNBC survey of 31 economists, strategists and investors found that 80% want Warsh to explain his thinking in more detail, a striking rebuke for a central bank whose communications are usually scrutinised line by line by global markets, including in Europe, where the European Central Bank and Bank of England have leaned toward more explicit forward guidance in recent years.
We have the most unusual Jackson Hole monetary symposium in recent memory on deck because of Warsh’s unforced errors early in his tenure. — Joseph Brusuelas, chief economist, RSM
The uncertainty is not merely rhetorical. At the Fed’s July policy meeting, three officials broke ranks to vote for a quarter-point rate increase, even as the broader committee held rates steady. Inflation has stayed above the Fed’s target, prompting some policymakers to push for the first hike since July 2023. Traders, per CME’s FedWatch tool, currently see roughly a two-thirds chance the Fed holds rates in September, against a one-third chance of a hike.
I don’t expect any signals to come out of Kevin Warsh’s Jackson Hole speech. — Jan Groen, chief US economist, Societe Generale
Groen told CNN Business that much of the volatility rippling through bond markets stems from uncertainty over how the Fed will respond to inflation, rather than any single data point. Separately, US Treasury Secretary Scott Bessent has announced plans to at least double the size of weekly buybacks of older, less-traded government debt, starting 9 September, a move aimed at smoothing bond market functioning.
Zinc squeeze hits European producers
Away from the podium, commodity markets have been sending their own signals. Zinc prices climbed to $3,955 a metric tonne, their highest level since May 2022, according to The Guardian’s live markets coverage. The rally has been driven by falling inventories on the London Metal Exchange, mine and smelter disruptions, and tighter refined metal supply outside China.
Trading Economics reported that flooding in China has also disrupted mining and smelting operations, compounding production cuts at Glencore and Boliden, both European-headquartered mining and metals groups, alongside MMG. The squeeze carries direct implications for European industries reliant on galvanised steel, from construction to automotive manufacturing, which depend on zinc for corrosion-resistant coatings.
Silver has also seen sharp swings, rebounding roughly 25% from July lows, though a Business Standard commentary flagged downside risks from rising inventories and a subdued lease rate on the London Bullion Market Association. Together, the commodity moves underscore a broader climate of market volatility as investors wait to see whether Warsh’s Jackson Hole remarks will finally offer the clarity they have been seeking since he took office.
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