https://www.youtube.com/watch?v=Ok8yjrzyeXQ
Jonathan Liang, chief investment officer for fixed income and foreign exchange at Standard Chartered Bank, reads Fed Chair Kevin Warsh's Jackson Hole speech in the bank's Cut to the Chase strand. He takes the hawkish and the dovish halves of the speech in turn, gives the futures market's reaction, and names the two releases the bank's chief investment office is waiting on before it decides whether the Fed hikes in September.
👤 Speaker: Jonathan Liang, chief investment officer for fixed income and FX at Standard Chartered Bank
📰 Published: 30 August 2026
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Key Takeaways
The speech raised the odds of a September hike, and Standard Chartered's investment office is still not calling it
Liang gave the view as the house view, not his own, and said there were a couple of reasons for holding off
Warsh finally named the target and the gauge: 2%, on PCE inflation
That is the level and the measure the committee will be judged against
Prices come before jobs in how the Fed chair described the dual mandate
The jobs market is okay; consumer prices are still too high
Three things on the dovish side: stable inflation expectations, AI productivity, and a housing market strained by high mortgage rates
Liang said Warsh is monitoring AI as a source of growth that does not bring significant cost pressure
The futures market read the speech as marginally hawkish and roughly doubled the odds on September
From around 30% to about 60%, with short-dated rates moving up faster than long-dated ones
The August payroll report and the following week's CPI settle it
Both land before the FOMC meeting later in September
Warsh Raised the Odds of a September Hike Without Settling Them
Liang opened with the call, and with the caveat attached to it. "To cut to the chase, we think Warsh's comment has risen the probability of a rate hike in September, but we at the CIO office is not quite yet ready to make that call for a couple of reasons", he said. The view is the bank's chief investment office's, not a personal read.
The speech was worth more than the Fed chair's last outing. Liang called it "a vast improvement from what he shared in the July FOMC press conference where he was not able to share much frankly"
At Jackson Hole, Warsh was willing to share a couple more important details about his thinking, which Liang then split into a hawkish side and a dovish one
The Hawkish Half: A 2% PCE Target, and Prices Ahead of Jobs
On the hawkish side of the equation, Liang said, the Fed chair made clear that the central bank was still committed to the 2% inflation target, and specifically to PCE inflation. That settles a question the July press conference had left open.
The speech established both the number and the measure: Liang said the market now knows the level the committee is working to and the gauge it will benchmark itself against on the overall economy
Within the dual mandate, Warsh put prices ahead of employment. Liang said "he felt the jobs market is okay, but that consumer prices was still too high and that part of the Fed's dual mandate was that they needed to focus on prices"
The Dovish Half: Stable Expectations, AI Productivity and a Strained Housing Market
Three things pulled the other way, and Liang listed them in the order the Fed chair raised them.
Inflation expectations remain stable and benign, in Warsh's account
AI is on the Fed chair's monitoring list as a source of growth without inflation: Liang said he pointed to "the potential productivity gains from AI that is being able to generate growth without generating significant cost pressures as something that he is monitoring"
High mortgage rates are straining the housing market, which Warsh treats as another area keeping financial conditions tight
The Futures Market Doubled Its Odds on September, and Two Releases Decide the Rest
The market's read was hawkish, but only just. "The Fed funds futures market interpreted Warsh's speech as marginally hawkish with Fed fund futures moving from around 30% chance of a September hike to about 60%", Liang said. Short-dated rates moved up faster than long-dated ones.
Two data points come out before the FOMC meeting later in September, and Standard Chartered will be watching both closelyThe August non-farm payroll report, due the Friday after the episodeThe next set of CPI numbers, the week after that
Liang said the investment office will share its thoughts on both announcements when they land, and signed off wishing listeners a good start to September
Liang's bottom line is that Jackson Hole told the market more than July's press conference did and moved the September odds with it, but that the payroll and inflation prints, not the speech, are what will decide whether Standard Chartered follows the futures market to a hike.
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