Fed Chair Warsh Speaks at Jackson Hole as France and Spain Release Inflation Data
Key Takeaways
- •France and Spain will release flash HICP inflation data that is expected to increase because of higher August energy costs.
- •Markets are likely to focus on core inflation rather than headline readings for a clearer view of underlying trends.
- •The European Central Bank has already signaled a September rate increase, so the data is not expected to change near-term policy expectations.
- •Fed Chair Warsh’s Jackson Hole remarks are being watched for any pushback against the recent easing in financial conditions.
- •A more hawkish tone could pressure debasement trades, while a neutral stance may allow them to extend further.
European Session
The European session brings preliminary inflation reports from France and Spain. Both are expected to rise, reflecting the increase in energy prices in August, though the focus will be on the core figures. These are flash, EU-harmonised (HICP) readings that feed into the euro area's aggregate flash estimate, and because energy costs tend to show up in the headline rate first, the core measures that strip out volatile energy and food components are the cleaner guide to the underlying trend.
Even so, the market reaction might be muted. The European Central Bank has already pre-committed to a rate hike in September and has signalled that there is less appetite to tighten further afterwards, meaning the data is unlikely to change anything for near-term policy.
American Session
In the American session, all eyes will be on Fed Chair Warsh's speech at Jackson Hole. After the Treasury buyback announcement and Bessent's "verbal" intervention to suppress long-term yields, the key question for traders is whether Fed Chair Warsh leans against the recent easing in financial conditions. Financial conditions — the bundle of bond yields, credit spreads, equity prices and the dollar that shapes household and business spending — matter to the Fed precisely because a loosening in those channels can work against restrictive policy.
The setting adds to the weight. Jackson Hole, the Kansas City Fed's annual late-August symposium, has historically been a venue where Fed chairs have framed turning points: Ben Bernanke used his 2010 remarks to pave the way for a second round of quantitative easing, and Jerome Powell used the 2020 edition to unveil the average inflation targeting framework. That record is one reason the wording, not just the timing, is parsed so closely.
If he does not, the current "debasement" trades — such as long precious metals, bitcoin and short US dollar, so-called because they position for a persistent erosion of fiat purchasing power — will likely extend further. On the other hand, if he pushes back with language such as "recent easing in financial conditions, if sustained, could complicate the process of returning inflation to our target" or "if recent easing threatens progress toward price stability, we will not hesitate to respond appropriately" and so on, the market may retighten financial conditions and the pullbacks in the "debasement" trades could extend.
Fed Chair Warsh is due to speak at 14:00 GMT/10:00 ET. The prepared remarks are typically released either moments before or simultaneously as the Fed Chair delivers his speech, and with the FOMC's next scheduled meeting in September, any shift in tone will be read as a signal about the policy path from there.
Central Bank Speakers
- 12:45 GMT/08:45 ET — BoE's Mann (hawkish - voter)
- 13:00 GMT/09:00 ET — Fed's Hammack (hawk - voter)
- 14:00 GMT/10:00 ET — Fed Chair Warsh (neutral - voter)
- 15:40 GMT/11:40 ET — BoE Governor Bailey (neutral - voter)
- 15:55 GMT/11:55 ET — ECB's Schnabel (hawk - voter)
- 16:30 GMT/12:30 ET — Fed's Goolsbee (hawkish - non voter)
