Your Daily Stock Market Briefing

Warsh's Hawkish Jackson Hole Speech Reprices September Rate Hike Expectations

• Federal Reserve Chairman Kevin Warsh's address at the Jackson Hole symposium on Friday, August 28, delivered a more hawkish warning on inflation than markets had anticipated, leading to a significant repricing of September rate hike expectations. Options traders now assign a 57% probability to a 25-basis-point hike at the September 15-16 FOMC meeting, a notable increase from approximately one-third before Warsh's speech. This shift in sentiment caused short-term bonds to plunge and propelled the U.S. Dollar Index to a two-week high.

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• U.S. equity markets experienced modest declines on Friday, August 28, as investors recalibrated expectations following the Fed Chair's remarks. The S&P 500 closed down 0.25% at 7,711.76, the Dow Jones Industrial Average shed less than 0.1% to 53,559.99, and the Nasdaq Composite fell 0.5% to 26,402.42. This comes as 44.4% of individual investors now anticipate a bear market in the next six months, a 4.5 percentage point increase in just one week, despite historical data suggesting bull markets typically recover more than double preceding bear market losses.

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• In capital markets, Moderna priced an upsized $2.6 billion convertible senior notes offering on August 28, aiming to refresh liquidity and manage its long-term capital structure. Concurrently, Kazia Therapeutics launched a public offering of up to $120 million to fund late-stage studies. Notably, USD.AI / Bullish secured a $100 million stablecoin debt facility to finance GPU purchases, highlighting the growing integration of crypto-linked financing within traditional capital markets.

  Stocktitan