In short
Federal Reserve Chair Kevin Warsh warned at Jackson Hole that persistent inflation risks require further action, causing gold prices to drop sharply by 3.2%. His comments followed July PCE inflation reaching 3.7%, well above the central bank's 2% target. Meanwhile, Treasury Secretary Scott Bessent warned that yen volatility could drive up US borrowing costs.
01Macro
Bessent Warns Disorderly Japanese Yen Volatility Could Destabilize Global Markets
Using the Exchange Stabilization Fund to stabilize foreign currency links domestic US borrowing costs directly to the unwinding of cross-border carry trades.
US Treasury Secretary Scott Bessent warned that disorderly movements in the Japanese yen could trigger forced position unwinds and ultimately raise borrowing costs for American households and businesses. In a letter dated August 27 responding to an inquiry from Senator Elizabeth Warren, Bessent defended Washington and Tokyo executing a joint yen-buying intervention on July 31. The Treasury used existing foreign-currency assets in its Exchange Stabilization Fund to buy yen, marking the first time the US has intervened to purchase the currency since 1998. The intervention initially lifted the yen toward 155.20 per dollar from a 40-year low near 164, but the currency slipped back past the 160 threshold as expectations for a near-term Federal Reserve interest rate hike grew. Japan reported spending a record $96.4 billion over the past month to defend the currency. Bessent emphasized that the US extended no credit to Japan and that the operation involved swapping existing reserve assets rather than securing new congressional appropriations.
cryptobriefing.com ↗
02Macro
US Inflation Remains Above Federal Reserve's 2% Target
Inflation continues to run above the Federal Reserve's 2% target, according to npr.org reporting. Ayesha Rascoe discussed the state of inflation and the broader economy with Mary Lovely of the Peterson Institute for International Economics. Price pressures persist despite the central bank's ongoing policy stance. Consumers face sustained cost increases across everyday goods and services.
npr.org ↗
03Market mover
Dollar Holds Steady Ahead of Jackson Hole; Yen Muted After BOJ Speech
Treasury debt buybacks aimed at suppressing yields conflict with central bank rate hikes, exposing how fiscal intervention to manage borrowing costs risks accelerating currency debasement.
Global markets held in a tight range on Friday as investors awaited Federal Reserve Chair Kevin Warsh's debut keynote speech at the Jackson Hole symposium. The US dollar traded near a one-week high with the dollar index at 99.20, supported by an economy growing at 1.5% in the second quarter. Treasury yields sat flat to slightly higher, with the 10-year note at 4.68% and the 30-year bond at 5.20%. Markets have fully priced in a rate hike by December, though traders put the odds of a move at the September 16 meeting at roughly 35%. The Treasury's recent expansion of its bond buyback program to suppress long-term borrowing costs has fueled ongoing concerns over currency debasement and rising debt levels. Meanwhile, the Japanese yen traded at 159.34 per dollar following a speech by Bank of Japan Deputy Governor Ryozo Himino.
cnbc.com ↗