· macrofireside.com · August 28, 2026
Read the strip closely, though, and it is less convinced than the headlines will suggest.
September prices at roughly 58%, up from one-in-three two weeks ago. A hike by November prices above 90%. So the market believes the what almost surely, while the when remains a live debate. I'll take the other side of the September leg.
Tactical hawkishness has a peculiar economics: the speech was free. Warsh collected everything a speech can collect. The strip repriced, gold sold, and the curve flattened hard behind it — twos up ten, tens up three, the long bond unchanged — because reserves stability was promised in the same breath.
Whatever damage the FOMC presser did to his standing was repaired by lunch. That payoff is fully banked. A September vote adds nothing to it, and the bill is real.
Consider the backdrop for that vote. A labor market that printed negative in July. A minus-79,000 benchmark payroll revision released this very morning. A Treasury running long-end operations his balance-sheet posture just promised not to disturb, and an administration whose rate preference is hardly a secret.
Three dissenters on the committee already lean hawkish; to lead them is to own the outcome. A new chairman choosing a hike nobody ordered as his first act would require a conviction his short tenure has not yet displayed. The speech proves he knows the words. September tests whether he votes them.
The strip has also handed him an exit. With November near certain, the market tightens on his behalf while he waits on another inflation print or two. Why spend conviction you can borrow?
We'll see in September.