Fed Chair Warsh Faces Pivotal Jackson Hole Test as Bond Yields Jump

WASHINGTON – Federal Reserve Chair Kevin Warsh prepares for his debut Jackson Hole keynote on Friday as long-term Treasury yields trade at levels not seen since 2007, raising pressure on the central bank chief to clarify policy intentions. The 30-year yield touched 5.31% on Aug. 17 and recently traded near 5.34%, while the 10-year yield reached 4.74%. Inflation has exceeded the Fed‘s 2% target for more than five years. The Treasury Department announced Aug. 19 it would double long-term bond buybacks to at least $4 billion per operation through Nov. 4, but relief proved temporary. Adam Posen of the Peterson Institute said Warsh should focus on near-term economic evaluation. Markets price a 45% probability of one rate hike by year-end and 20% for two, per CME FedWatch. Warsh has offered little forward guidance since taking office in May.