Bank of America strategists assess potential impact of Kevin Warsh’s Jackson Hole speech on US yield curve

Bank of America strategists led by Michael Hartnett are framing Fed Chair Kevin Warsh’s upcoming Jackson Hole keynote as a binary event for the Treasury market. Get it right, and the yield curve flattens in a way that supports risk assets and strengthens the dollar. Get it wrong, and yields could blow past levels not seen since before Treasury Secretary Scott Bessent’s buyback communications earlier this month. The assessment, issued on August 28, lands at a moment when the bond market is already running hot. The 30-year Treasury yield has climbed to 5.34%, a watermark not touched since 2007. US national debt has crossed the $40 trillion threshold. And inflation, as measured by July’s CPI print, sits at 3.4%, still well north of the Fed’s 2% target. The two scenarios BofA is watching The strategists laid out a clean framework for thinking about Friday’s speech, scheduled for around 10 a.m. ET. They call the optimistic path a “bull success” scenario: Warsh delivers a balanced message that keeps short-term yields contained while providing enough hawkish credibility to anchor long-term yields. The result would be a flatter curve, which historically tends to create a friendlier environ...