Jackson Hole could trigger dollar, bonds sell-off, market watchers say

Key Points:

• Central bankers and economists will convene at the Federal Reserve Bank of Kansas City's annual symposium in Jackson Hole, Wyoming, with Fed Chair Kevin Warsh's Friday keynote speech highly anticipated amid recent spikes in long-term U.S. Treasury yields.
• The U.S. Treasury's announcement to double its buybacks of long-term government debt to $4 billion aimed to curb a bond market sell-off, but some analysts warn this intervention could complicate the Fed's inflation fight and pressure the central bank's independence.
• Inflation remains above the Fed's target, with the personal consumption expenditures price index rising 3.7% year-over-year in July, keeping markets on edge ahead of Warsh's speech, which could influence bond yields, the U.S. dollar, and investor expectations.
• Bank of America strategists view Jackson Hole as a key risk event, expecting Warsh to provide clearer guidance to contain long-term Treasury yields, while others predict a dovish tone that might steepen the yield curve and weaken the dollar.
• Market experts suggest that Warsh's speech could sway the 10-year Treasury yield's trajectory near the critical 5% level, with a hawkish tone potentially restoring credibility but tightening consumer conditions, while a dovish stance might boost curve steepening and dollar weakness.