Marc Chandler - Warsh at Jackson Hole, Fed vs. Treasury Friction, Gold & Silver Pullbacks

The KE Report Aug 28, 2026

Summary

Warsh's Jackson Hole speech hit a hawkish tone — 2-year yield jumped 10 bps, markets now price 100% chance of a Fed hike by year-end.

The Fed and Treasury are split: Bessent wants lower yields via buybacks while Warsh prefers a clean market signal, and the friction could persist.

The dollar index rebound has more room, with momentum indicators just turning and a 95–101 range likely to hold through the jobs and CPI prints.

Gold and silver sold off on the rate/dollar shift; gold looks headed to $4,300 and silver to $62–63 after a key outside reversal day.

Hyperscaler borrowing for AI buildouts is swelling Treasury supply, steepening the curve and complicating Fed rate decisions.

Top takeaway The speaker argues Warsh delivered a hawkish Jackson Hole speech on August 28, 2026, reaffirming the 2% PCE inflation target and rolling back forward guidance — markets read this as a possible rate hike by year-end.
According to the speaker, Warsh is not worried about labor markets (4.1% unemployment, claims near multi-decade lows) and doubts soft CPI or jobs data will change his mind, treating interest rates as the main policy tool.
The guest says Warsh wants to distance policy from the Summary of Economic Projections/dot plot and may therefore delay any move to the October FOMC rather than September.
The host argues Warsh's broader philosophical stance is for a cleaner market signal — moving away from forward guidance because the Fed and market have been in a 'house of mirrors'.
The discussion frames Warsh as in tension with the Treasury, which the speaker says is pursuing easier policy under Bessent.

Top takeaway The guest frames Bessent as the Treasury Secretary pursuing easier policy (including bond buybacks) that contrasts with Warsh's hawkish Fed stance.
According to the speaker, Bessent's philosophical view is that he knows better than the market where U.S. yields should be — in opposition to Warsh's preference for clean market signals.
The host observes that Bessent's bond buyback program has had little lasting impact on yields, with the 10-year finishing near 4.70% on August 28, 2026, concluding that 'the market is bigger than Bessent'.

Top takeaway The speaker expects further dollar upside over the next three to four days, arguing that technicals and fundamentals have aligned and that momentum indicators like stochastics have just turned.
Chandler says the dollar move is a correction within a roughly 95-101 dollar-index range, not a breakout, and advises clients who need to sell dollars to be patient for a better entry.
The guest is personally long both metals but says gold and silver 'look ugly' technically, projecting gold toward $4,300 and silver back to $62-63 after a key outside reversal in silver from above $70.
Chandler argues AI-related borrowing by hyperscalers is competing with U.S. Treasuries for capital, contributing to higher long-end yields and a steeper curve alongside large budget deficits.
The speaker expects soft August jobs (next Friday) and CPI prints and questions whether three Fed dissenters will gain more support at the September FOMC, noting no voters have crossed over yet.