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August 28, 2026 - 21:00
5 minutes
(Bloomberg) — Wall Street traders sent short-term yields sharply higher as Federal Reserve Chair Kevin Warsh vowed to bring inflation to the target, boosting bets on a rate hike and stabilizing longer-dated bonds.In his first major speech since taking the helm of the central bank, Warsh appeased investors urging a strong determination in dealing with price pressures after a recent bout of Treasury volatility. Two-year yields climbed 12 basis points to 4.35%. Those on 30-year securities barely budged. The dollar rose. Gold fell. The S&P 500 erased an earlier gain as chipmakers dropped.“Here is my standard: We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do. That’s our job,” Warsh said at the Fed’s annual conference in Jackson Hole, Wyoming.Warsh added that financial conditions are not currently restrictive and rates are the Fed’s “predominant tool” for achieving its mandate, but stopped short of signaling he would support a hike when officials gather in September.“I would say Warsh was successful in reestablishing confidence,” said Larry Holzenthaler at Catalyst Funds. “He came across as very focused on inflation and bringing it back in line with the Fed’s 2% target. The market seems to be reacting exactly the way the Fed wants.”“I believe he did a very good job of laying out a pathway, a framework, a playbook and the rules of his road on what he’s watching out for and what will guide him in terms of properly calibrating monetary policy as best he can,” said Peter Boockvar, author of The Boock Report.Warsh’s speech delivered a far clearer – and hawkish – message than his last press conference, noted Capital Economics. Hikes are not guaranteed, but the Fed chief is now at least suggesting he’s on board with them if economic growth remains strong and inflation stays a bit too firm, it added.“Although we expect incoming data to improve, the risk of a September hike has increased,” said Seema Shah at Principal Asset Management. “The positive market reaction highlights that investors place a premium on policy clarity, even when that clarity carries a more hawkish message.”After Warsh’s remarks, traders boosted the odds of the Fed raising borrowing costs, with money markets projecting a more than 50% chance of a hike at the Sept. 16 meeting. At least one such move by the end of the year is seen as virtually assured.“The caveat is that we think the remaining data likely will show some further incremental progress and suspect Warsh may well also hope that this is the case,” said Krishna Guha at Evercore. “So we hold back from moving odds-on for September at this juncture and instead view this as close to a coin toss.”Corporate Highlights:A consortium of buyout firm Advent and payment processor Stripe has decided to abandon its pursuit of fintech pioneer PayPal Holdings Inc., a potential deal that would have ranked as one of the biggest-ever leveraged buyouts, according to people familiar with the matter. Gap Inc. named a retail industry veteran to head Old Navy while profit outpaced estimates, offsetting a sales decline at the value chain and lower sales guidance. Chevron Corp. is in talks to expand in Venezuela, the latest sign of how US interests are trying to tighten their grip on the Latin American nation’s oil industry. Rivian Automotive Inc. announced that Chief Financial Officer Claire McDonough would step down from the electric vehicle manufacturer in the coming months to take the same role at turbine maker GE Vernova Inc. Eli Lilly & Co.’s blockbuster diabetes drug Mounjaro won US approval to reduce the risk of serious cardiovascular problems, broadening the medicine’s reach beyond controlling blood sugar and strengthening its position in the increasingly competitive market for GLP-1 drugs. Some of the main moves in markets:StocksThe S&P 500 fell 0.4% as of 3 p.m. New York time The Nasdaq 100 fell 0.8% The Dow Jones Industrial Average was little changed The MSCI World Index fell 0.3% CurrenciesThe Bloomberg Dollar Spot Index rose 0.4% The euro fell 0.6% to $1.1580 The British pound fell 0.5% to $1.3531 The Japanese yen fell 0.5% to 160.15 per dollar CryptocurrenciesBitcoin fell 3.3% to $77,489.02 Ether fell 3.3% to $2,425.45 BondsThe yield on 10-year Treasuries advanced five basis points to 4.72% Germany’s 10-year yield advanced three basis points to 3.28% Britain’s 10-year yield advanced three basis points to 5.06% CommoditiesWest Texas Intermediate crude fell 0.5% to $83.12 a barrel Spot gold fell 3.1% to $4,454.32 an ounce ©2026 Bloomberg L.P.
