Following Federal Reserve Chair Kevin Walsh's hawkish stance in his Jackson Hole speech, Bitcoin fell from over $80,000 the previous day to around $77,100 at one point, and US stock markets also weakened. The S&P 500 closed down 0.25% and the Nasdaq Composite down 0.52%, but on the week they were up 0.49% and 0.85%, respectively. Walsh prioritized curbing inflation, made no mention of rate cuts, and said financial conditions are "not broadly restrictive." After the speech, CME's FedWatch tool showed the probability of a September rate hike rose from around 35% the previous day to about 55-60%, and the 2-year Treasury yield rose 7-9 basis points. On the prediction market platform Polymarket, the probability of a rate hike by mid-2026 rose to 68%. The Fed's next meeting is scheduled for mid-September, setting up a confrontation with President Trump's demands for rate cuts.
Hawkish remarks raise rate hike odds, driving 2Y yield up 7-9 bps.
Hawkish stance raises rate hike odds, pushing policy rate higher.
Hawkish Fed signals lift yields, though 10Y not explicitly mentioned.
