"A reduction of the balance sheet is coming, albeit with a very different view on how that outcome would feed through to the economy and ultimately to inflation. For markets, the need to consider both tools will force extra debate about how to price policy going forward."

Kalshi sees a low chance that Federal Reserve Chairman Kevin Warsh will mention "bond market" or "rate cut" at the annual Jackson Hole Symposium.

Prior Fed chairs have used the speech as an opportunity to lay out broad policy frameworks and intentions.