What Warsh will say and how the market will react, according to prediction markets

Market watchers are closely listening to how elaborate Federal Reserve Chairman Kevin Warsh will be about the central bank’s next decision in September and whether he’d acknowledge the U.S. Treasury’s intervention in bond markets last week.

Kalshi traders, though, see low odds the chairman’s keynote address will touch on those matters at the annual Jackson Hole Symposium in Wyoming early Friday.

As of Thursday afternoon, prediction market traders give only 16% odds that Warsh will mention the “bond market” and a 8% chance he says “yield curve,” two terms that could reference the highs seen in Treasury yields last week.

The terms Warsh may utter could also relate to the U.S. Treasury Department decision to double buybacks of long-term government debt to at least $4 billion from $2 billion. Experts interpreted the move as a means of easing government bond yields.

But the low odds on the Kalshi’s “mention markets” suggest the chairman will avoid discussing bond markets in general, despite the rising yields effect on how September’s Fed decision rolls out.

As chairman, a central goal of Warsh’s is to contain inflation at the central bank’s 2% target.

Last week, the 30-year Treasury yield surpassed 5.3%, the highest since June 2007. The next day, Treasury Secretary Scott Bessent announced the department would increase its buybacks of long-term Treasury debt.

“By further front-loading T-bill issuance, I believe the U.S. Treasury is complicating the Fed’s job,” said Peter Boockvar, chief investment officer at One Point BFG Wealth Partners.

Hush on September’s moves

A CNBC Survey also found that 45% of respondents do not expect Warsh to expand on the rate outlook in his Jackson Hole speech. Analysts also doubt the chairman will hint at the Fed’s decision next month.

“Warsh has been much more reluctant to share his policy views or assessment of the current economic situation than Powell was,” said David Mericle, the chief U.S. economist at Goldman Sachs in a Tuesday note, referring to former Fed chief Jerome Powell. “We do not expect Warsh to provide strong hints about the Fed’s decision in September.”

Kalshi odds also show just an 8% chance the chairman will say “rate cut.” Odds are higher, at nearly 90%, that the chairman will reference “inflation” and over a 70% likelihood he’ll say “task force.” The Fed announced task forces in June to track how the agency sets monetary policy.

A smaller market projects a 67% chance that the S&P 500 will move 0.5% after Warsh’s speech.

Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.