Hawkish Jackson Hole rewrites the rate path — and a North American trade war escalates.
Fed Chair Kevin Warsh's Jackson Hole address landed more hawkish than expected, with commentary describing him as prioritizing inflation over the labor market, refusing forward guidance, and calling recent disinflation insufficient. Analysts noted market-implied odds of a September *hike* jumped to roughly 60%, the dollar rallied, the yen slid toward 160, and the front end of the Treasury curve sold off sharply. Global bond yields pushed higher in sympathy, with several research notes flagging that policy rates in the US, UK, Australia, and euro area now sit well below long-end yields — markets pricing tightening, not cuts.
Separately, the US imposed 50% tariffs on roughly $20B of Canadian goods; Canada retaliated with matching 15–50% duties and a C$7.5B support package. Researchers warned of up to 87,000 Canadian jobs at risk, added US inflation pressure, and a stagflationary bind for the Bank of Canada. Payrolls Friday is the next pivot.