🔔 Warsh just raised the odds of a rate hike to 60%
Kevin Warsh walked into Jackson Hole on Friday and left no ambiguity about who's running monetary policy — and it wasn't the guy in the White House.
Listen to the same-day episode — Ep. 050
🔔 Warsh just raised the odds of a rate hike to 60%
Kevin Warsh walked into Jackson Hole on Friday and left no ambiguity about who's running monetary policy — and it wasn't the guy in the White House.
Alex Monroe
August 31, 2026
⏱️ ~4 min read
📊 Today's Numbers
Sept Rate-Hike Probability ▲ 60.40%: up from ~56% pre-speech
Gold ▼ $4,529.90/oz: biggest single-day drop of August
S&P 500 ▼ 7,711.76: off 0.25%, small-caps hit harder
Russell 2000 ▼ -1.39%: sharpest fall among major US indices
German Retail Sales ▼ -1.50% MoM: badly missed a -0.40% forecast
China Manufacturing PMI ▲ 49.80: best in three months, still below 50
🏦 MACROECONOMIC
Photo: Miles Burke
Warsh's Hawkish Jackson Hole Speech Lifts Sept Rate-Hike Odds to 60%
Fed Chair Kevin Warsh didn't just reaffirm the 2% inflation target at Jackson Hole on Friday. He told the room that financial conditions aren't broadly restrictive — and that rates may need to go higher. Markets heard him loud and clear.
September hike probability hit 60.40% (CME FedWatch), up from roughly 56% before the speech, repricing variable-rate debt costs for millions of US households
Warsh's language shifted: "not broadly restrictive" is harder than his July framing of "uneven," signalling the Fed sees room to tighten further if disinflation stalls
August jobs report on September 5 is now the decisive data point before the FOMC meets September 15–16
💬 If the jobs number comes in hot, that 60% probability gets a lot closer to 70 — and a September hike stops being a tail risk.
🛢️ COMMODITIES
Photo: Michael Steinberg
Gold Tumbles 2.88% to $4,529.90 as Dollar Surges on Hawkish Fed
Gold had its best month this century in August. Then one Friday afternoon speech took nearly 3% of it back.
Gold fell $134.10 to $4,529.90 per troy ounce on August 28, its sharpest single-session drop of the month, partially unwinding what had been a ~14% August rally
Central bank demand provides a structural floor: the World Gold Council recorded a quarterly record 288.9 tonnes purchased in Q2 2026, up 62% year-over-year
Major banks still see upside: Goldman Sachs targets $4,900 by year-end, JPMorgan $4,500 for Q4 — both above current spot
💬 Think of it this way: gold spent all month climbing the stairs and gave back a floor in an elevator ride. The question is whether central banks keep propping up the lobby.
🏦 MACROECONOMIC
Photo: Pixabay
German Retail Sales Slide 1.5% MoM in July, Deepening Eurozone Growth Fears
Germany's consumers are not spending. The July retail sales miss wasn't close — consensus expected a 0.4% monthly decline, and the actual number came in at 1.5% down. For an economy already in its second consecutive year of GDP contraction, that's not a blip.
Monthly retail sales fell 1.50% vs. a -0.40% consensus and a prior reading of +1.00%, the sharpest monthly miss in several months
Annual retail growth collapsed to 1.90% from 4.90% in June, a three-percentage-point deceleration in a single month
EUR/JPY dropped to roughly 171.45 immediately after the release, reflecting euro weakness that raises the cost of dollar-denominated imports, including energy, across the Eurozone
💬 We're watching whether the ECB reads this as a reason to cut sooner — or holds firm because inflation is still above target and the growth picture is murky enough to argue both ways.
📰 Also Today
China's August Manufacturing PMI rose to 49.8, beating the 49.7 consensus and July's 49.2 reading, but the Non-Manufacturing PMI was flat at 49.0 and the Australian dollar barely moved, slipping just 0.04% to 0.7162 — commodity markets are telling you one slightly better PMI print doesn't reopen the China demand trade.
Tokyo CPI held above the BoJ's 2% target in August at 2.6% year-on-year, with the more closely watched core-core measure at 3.0% — the Bank of Japan's gradual rate-hike path stays intact, and with the Fed and BoJ now both leaning toward tightening, the currency and bond market divergence this creates is the real story worth watching.
The Russell 2000 dropped 1.39% on Friday, its steepest fall among major US indices, while the VIX closed at 14.43 — calm at the surface, stressed underneath, specifically in the small-cap companies most exposed to higher domestic borrowing costs if September delivers a hike.
🎧 Listen to today's episode — The Open Bell with Alex Monroe
The 60% hike probability is the number worth repeating in conversation today. Tell someone.
📬 Forwarded this? Subscribe free at theopenbell.co
Not investment advice. For informational purposes only.