This content was published on
August 31, 2026 - 09:14
4 minutes
(Bloomberg) — US Treasury yields ticked lower and stock futures were mixed as traders assessed the outlook for interest rates following Federal Reserve Chairman Kevin Warsh’s hawkish inflation comments at Jackson Hole. Oil climbed as Middle East tensions flared.The two-year Treasury yield, which is the most sensitive to interest-rate changes, dropped three basis points, paring some of Friday’s jump after Warsh warned that inflation isn’t meaningfully slowing, and policymakers have “work to do.” Traders boosted bets on a September rate hike after he spoke, although some market commentators expressed skepticism about such a move.Futures on the S&P 500 slipped 0.2% while contracts on the Nasdaq 100 were flat. The dollar was steady after jumping the most in more than two months on Friday. Gold extended a retreat. Europe’s benchmark Stoxx 600 equity index was little changed, with UK markets closed for a holiday.“The straight read of Chairman Warsh’s speech was hawkish, but we are not convinced it means hikes are coming,” Morgan Stanley analysts including Michael Gapen wrote in a note. “We maintain our view for the Fed to remain on hold this year on evidence of disinflation.”Meanwhile, Brent crude climbed 2.8%, nearing $91 a barrel. Washington and Tehran exchanged strikes for the first time in about a month, with US Central Command targeting rocket launchers preparing to send mines into the Strait of Hormuz. In response, the Islamic Revolutionary Guard Corps said that it had attacked US air bases in Jordan.Traders boosted bets to 62% that the Fed will raise its benchmark rate when it meets next month from about 34% odds before Warsh spoke, according to swaps data compiled by Bloomberg.Warsh said financial conditions aren’t currently restrictive and described rates as the Fed’s “predominant tool” for achieving its mandate, while stopping short of signaling support for a hike in September.Warsh has re-established hawkish credibility at Jackson Hole with his unambiguous reference to inflation as the greater risk, Vishnu Varathan, head of macro strategy for Asia Pacific at Mizuho Securities in Singapore, wrote in a note.“But this is neither a commitment of imminent hikes in September-October, nor an inclination for sustained hiking cycle,” he said.Bond investors at firms including ABN Amro Investment Solutions and Brandywine Global Investment Management also voiced skepticism about mounting speculation that Warsh is poised to raise interest rates.Elsewhere, the yen strengthened 0.1% to 159.87 per dollar on Monday. Traders remain on alert to any stronger rhetoric from Japanese officials after the currency weakened on Friday to a one-month low following the dollar’s surge.Some of the main moves in markets:StocksThe Stoxx Europe 600 was little changed as of 8:09 a.m. London time S&P 500 futures fell 0.2% Nasdaq 100 futures were little changed Futures on the Dow Jones Industrial Average fell 0.2% The MSCI Asia Pacific Index was little changed The MSCI Emerging Markets Index fell 0.3% CurrenciesThe Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1586 The Japanese yen rose 0.2% to 159.78 per dollar The offshore yuan rose 0.1% to 6.7209 per dollar The British pound was little changed at $1.3541 CryptocurrenciesBitcoin fell 0.7% to $78,076.24 Ether fell 2.1% to $2,439.07 BondsThe yield on 10-year Treasuries was little changed at 4.71% Germany’s 10-year yield was little changed at 3.29% Britain’s 10-year yield advanced three basis points to 5.06% CommoditiesBrent crude rose 2.6% to $90.41 a barrel Spot gold fell 0.4% to $4,438.02 an ounce This story was produced with the assistance of Bloomberg Automation.–With assistance from Winnie Hsu.©2026 Bloomberg L.P.
