Treasuries Look Vulnerable to Another Vague Warsh Speech

Summary

Bloomberg Surveillance Host Tom Keene previews Fed Chair Kevin Warsh's Jackson Hole speech, calling the tone and content highly uncertain. He notes the Treasury secretary is actively buying bonds to push rates down and highlights the view that current yields are not concerning relative to elevated U.S. nominal GDP. The main market implication is that Treasuries look vulnerable to another vague Warsh speech.

• Keene calls the upcoming Warsh speech a complete mystery and hugely up in the air.
• Economists hope Warsh reframes the Fed's reset after a difficult press conference.
• Keene expects Warsh will likely avoid mentioning the Treasury secretary's bond buying.
• He highlights the view that current yields are not concerning given 5-7% nominal GDP.
• Ethan Harris sees the speech as a potential nothingburger.
• The setup leaves Treasuries vulnerable to a vague Warsh speech.