Economy / Markets
Weekly Markets: Warsh's hawkish turn reorders the September Fed decision and the AI capex trade
Kevin Warsh's Jackson Hole speech shifted the Fed debate from when to cut to whether to hike, lifting the implied probability of a September move to 55.7% from 35.4% and pushing short-dated Treasury yields and the dollar higher. Equity reaction split along AI exposure: Nvidia gave back Thursday's post-earnings gains as financing costs rose, while Amazon added roughly $110 billion of market value despite a $7.6 billion free-cash-flow outflow. The September dot-plot will determine if the move is tactical or a tighter-for-longer regime.