Watch Live: Fed Chair Warsh Delivers Keynote Address At Jackson Hole

Nothingburger or market upheaval?

Fed Chair Kevin Warsh will deliver his first keynote address at the Kansas City Fed’s Jackson Hole Economic Policy Symposium this morning.

As we highlighted in our extensive preview, Warsh noted at the July FOMC meeting that his remarks could go in one of two directions: a “big-picture speech” or a “more traditional set up for all the action we’re going to have between September and December.”

How much will Kevin Warsh say in Jackson Hole today? That’s the question on investors’ minds.

Goldman Sachs economists expect Warsh to reiterate his commitment to the 2% inflation target, expand on the rationale behind his approach to Fed communication, and offer thoughts on some bigger picture topics such as productivity growth or shocks to the global economy that he alluded to at his last press conference (full note here).

He is likely to acknowledge the better recent inflation news but is unlikely to provide policy guidance.

Markets are looking for Warsh to clarify what combination of inflation, labor and financial conditions would cause him to recommend a change to policy, and whether the policy rate is his primary tool.

A notable lack of guidance at July’s FOMC press conference, after a more hawkish tone in June and during congressional testimonies, caught markets off guard and was ultimately a credibility-negative signal.

Goldman’s Rich Privorotsky calls the setup: “awkward when you committed to not giving forward guidance.”

His modal view is “nothing done.”

But warns the market of the possibility that Warsh waivers and tries: “a left tail of a more tough on inflation message that helps bring credibility back.”

That left tail only flattens the curve, he adds, if it arrives with Treasury increasing buybacks.

Goldman’s George Cole is less polite about the politics. Warsh, Cole says, seemed to endorse the July story that higher long-end yields meant the market was “finally standing on its own feet” after years of central-bank repression. Then Scott Bessent told that same market it had the price wrong. Cole’s line: “Philosophically, you can’t claim to want an unpolluted read of market pricing while bullying that same market.”

So he would be “surprised if he re-runs the July script and celebrates the move higher in long-end yields.”

What traders and Fed-watchers want instead is “vol-reducing: marginally hawkish near term, but fundamentally calming.”

Warsh’s Jackson Hole speech provides a timely opportunity for the Fed’s new leader to clarify his vision for the central bank, either through a “big picture” talk focused on the task forces or through a policy-relevant discourse that cleans up some missteps in recent communications and presents scenarios for the outlook. Given his overall inclination to provide limited information about the policy outlook, his comments will most likely skew to the former, though markets will be attentive to any additional signals on the latter.

Translation: say the funds rate is the tool, say the data looks fine, sound a little more like June on 2%. Do not celebrate the selloff. Also do not rule out that Warsh “may just deliver a speech on international payments and financial innovation and say nothing on policy at all.”

Reminder, there is no Q&A after the speech.

Watch Warsh live here (due to start at 10amET):

Full Prepared Remarks…