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The Last Page.
The last page, first.
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Whose Fed Is It, Warsh’s or Bessent’s?
Kevin Warsh takes the podium at Jackson Hole this morning, promising an answer on inflation. Scott Bessent’s Treasury may have already written it.
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The story
Kevin Warsh gives his first Jackson Hole speech as Fed chair this morning. It lands on your mortgage rate either way.
On July 29, the Fed held rates steady, but three regional presidents dissented and wanted a hike instead. Core prices, the measure the Fed actually targets, rose 3.3% in July, well above the 2% target.
Treasury Secretary Scott Bessent answered differently. He raised the Treasury’s long-bond buyback program to at least $4 billion. That followed the 30-year yield’s climb to 5.33%, a 19-year high, earlier this month.
Standard Chartered says Warsh must bluntly commit to raising rates if inflation stays hot. PGIM’s Greg Peters calls Bessent’s buyback “a self-limiting, self-defeating strategy.” He says even Warsh may not know what he is supposed to do about it.
Prediction markets put the odds of a September hike at about one in three.
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3.4%
July’s headline inflation rate.
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3.3%
Core prices, the Fed’s own gauge.
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5.18%
The 30-year yield, still near a 19-year high.
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Best case
SEPTEMBER 16, 2026. The Fed raises its benchmark rate a quarter point today, the first hike of Warsh’s tenure. He drew the line at Jackson Hole in August, and the committee just proved he meant it.
Bond traders who spent the summer selling long Treasuries start buying them back. The 30-year yield, above 5.30% in August, eases toward 5%, and your next mortgage quote follows it down.
Bessent’s buyback matters less now. The market believes the Fed again, and it stops charging a premium for doubting it.
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Worst case
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SEPTEMBER 16, 2026. The Fed holds rates steady today, its fourth straight hold under Warsh. His Jackson Hole speech in August stayed as vague as the one before it.
Bessent’s Treasury keeps buying its own long bonds to hold the 30-year near 5%, but the relief does not last. Core prices come in hot again in the September reading.
Traders stop waiting on the Fed and start selling Treasuries themselves. The 30-year yield pushes back above 5.33%, on its way toward 5.5%, and your mortgage quote follows it up.
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How it ends
You get the Treasury still setting the terms unless Warsh’s speech breaks the pattern today.
Every rate decision this year has left the door open. Three officials dissented in July wanting a hike, and the Fed held anyway. Bessent moved into that opening himself. He expanded the buyback to hold the 30-year near 5.18%, instead of letting the market push it back toward August’s 5.33% high.
None of that made the inflation problem go away. Core prices are still running 3.3% a year, well above target. An economist at EY-Parthenon has already called this fiscal dominance, when the Treasury sets the rate the Fed is supposed to control.
Prediction markets put the odds of a hike at one in three, closer to a coin flip than to a promise. That is a market betting Warsh keeps talking, not acting.
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The hinge is what Warsh actually says at Jackson Hole today. Standard Chartered’s bar: a plain commitment to raise rates if core inflation does not come down. Anything short of that leaves Bessent’s bond buyback as the policy actually moving your rate.
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One finished story, every weekday morning. If today is not for you, the door below still opens.
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The Last Page.
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