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The Warsh & Bessent Showdown at Jackson Hole (Friday)
Fed Chair Kevin Warsh is delivering his keynote at the Jackson Hole Symposium on Friday. This year’s symposium carries extra weight because of the emerging dynamic between Warsh’s Federal Reserve and Scott Bessent’s Treasury Department over the bond market and inflation.
Here’s the backdrop. US bonds yields have been spiking. The US30Y hit a 19-year high near 5.33% before Secretary Bessent announced larger bond buybacks (raising the buyback size from $2B to at least $4B, starting September 9th). Bessent is doing this in an attempt to bring bond yields down, because lower yields ease the US’ debt repayment burden. Bitcoin and gold ripped north on Bessent’s announcement.  So the key issue going into Friday is that Warsh and Bessent probably have goals that are at odds with the other. Warsh’s mandate is 2% inflation (which he doesn’t have), and his primary tool to get that is hiking interest rates. But Secretary Bessent needs to keep the cost of funding the US government low. Bond buybacks are a way to do it, but they loosen larger financial conditions.
Therefore, Bessent’s action in the bond market makes Warsh’s inflation fight harder. So, the big question for Friday is will Warsh respond to Bessent’s intervention, and if so, how.
Now Fed chairs are always careful with their language, and Warsh takes that to the next level. But regardless, this is the dynamic going into Friday, and the markets will be paying attention to every word uttered by Warsh.
Hyperliquid Petitions SEC & CFTC to Update Perp Rules
The Hyperliquid Policy Center (that’s right, Hyperliquid has a DC lobbying arm) is actively petitioning the SEC and CFTC to create a unified, regulatory framework for perpetual contracts in the US. The lobby submitted a comment letter to the two regulatory bodies yesterday, and then posted a summary of it on X.
Currently, perps regulation depends on the underlying asset, and not the economic structure of the perps product itself. Hyperliquid says that’s an outdated approach and wants perps regulated according to the economic structure of the contracts. The lobby argues this would greatly unify and simplify the regulatory regime.  Obviously, such a change benefits Hyperliquid, given users can trade perps on every asset category under the sun. Therefore, Hyperliquid’s operation creates a regulatory mess under the current rules. And interestingly, this push comes on the heels of President Trump’s comment last week that the CFTC is working to bring a “fully compliant” Hyperliquid to the USA.
Trump’s comment last week is one of the reasons HYPE pumped hard. So if the protocol is able to make its way to US shores, while also keeping its core value proposition intact (i.e. ability to trade perps on everything), then even further price appreciation is likely.
This Week’s Key Economic Data Releases
Besides the Jackson Hole Symposium, it’s still a busy week in terms of economic data releases. Here’s the market moving events to watch from now to Friday.  ● Core PCE (Tomorrow, 8:30 am ET): The Fed’s preferred inflation gauge. Previous Core YoY PCE was 3.3%, and tomorrow’s forecast is also 3.3%. Previous Core MoM PCE was 0.1%, and tomorrow’s forecast is 0.2%. The markets will be watching closely to see if underlying inflation is cooling or re-accelerating.
● Q2 GDP (Tomorrow, 8:30 am ET): This is measuring QoQ GDP changes. The previous print was 1.5%, and tomorrow’s forecast is also 1.5%.
● Major Tech Stock Earnings (Tomorrow After the Bell): We discussed these in Alpha Leaks above, but it’s worth repeating. The big earnings release tomorrow is Nvidia. The market is undecided as to whether the AI trade has further to go, or if it’s over-extended. Nvidia’s earnings will give some clues as to which it might be. The forecasted EPS and revenues are $2.08 and $91.9B, respectively. Expect volatility when the print hits. Along with Nvidia, CrowdStrike and SalesForce’s earnings will round-out the major tech stock releases for the week.
● Chicago PMI (Friday, 9:45 am ET): Regional manufacturing and business activity gauge. Readings above 50 indicate economic expansion. The previous print was 57.6, and Friday’s forecast is 57.8.
Everything above lands at a particularly sensitive moment for markets. PCE inflation data remains the key input for the Fed’s September decision, and Nvidia’s results will indicate whether the AI trade still has momentum. Expect elevated volatility tomorrow.
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