All Eyes Turn to The Labor Market after Hawkish Jackson Hole Keynote

Fed Chair Kevin Warsh used his first Jackson Hole keynote, on August 28, to say the central bank still has work to do on inflation and to leave future hikes on the table. Futures repriced September 16 hike odds to 64.3% from 42.9% and the 10-year Treasury yield rose 6 basis points to 4.76%, while the S&P 500 held a 0.4% weekly gain. The repricing landed in rates, not equities — tokenized equities absorbed it through positioning rather than price, with keynote-day volume at the week's high and concentrated in SPYx while the most rate-sensitive single names sold off.

Despite an in-line print on core PCE, the 3.3% level is still considerably above the 2% target reaffirmed in Jackson Hole. Two prints now decide the September meeting: the August jobs report on September 4 and August CPI on September 11. Consensus looks for nonfarm payrolls to rebound to 55,000 in August, following July's -23,000 print, itself a sharp miss against a forecast of 80,000. Should August also print negative, the Fed would be hiking into back-to-back negative payrolls — it has not hiked following even a single negative print since 1994, the start of the explicit-target era, so a second weak month is the most direct route to unwinding the hike pricing already in futures. In equities, Nvidia's August 26 beat pulled NVDAx volume up 32.6%, and Broadcom reports September 2 as the next read on AI capex.