China International Capital Co said in a note that on Aug. 28 Beijing time Fed Chair Kevin Warsh used his Jackson Hole keynote to shift hawkish, reiterating a 2% PCE inflation target and the Fed’s duty to maintain price stability. Market reaction: 2-year U.S. Treasury yields jumped over 10bp, the dollar rallied, gold fell about 3%, and CME futures lifted the odds of a September rate hike from 35% to 58%. The move was not panic-driven: U.S. equity volatility was limited, 10-year UST rose roughly

China International Capital Co said in a note that on Aug. 28 Beijing time Fed Chair Kevin Warsh used his Jackson Hole keynote to shift hawkish, reiterating a 2% PCE inflation target and the Fed’s duty to maintain price stability. Market reaction: 2-year U.S. Treasury yields jumped over 10bp, the dollar rallied, gold fell about 3%, and CME futures lifted the odds of a September rate hike from 35% to 58%. The move was not panic-driven: U.S. equity volatility was limited, 10-year UST rose roughly 4bp while 30-year UST declined, indicating markets are pricing a near-term hawkish impulse in exchange for longer-run stability.