New Inflation Threats Pose Interest Rate Risks & Analyzing Yen Weakness

Jackson Hole remarks by Fed Chair Kevin Warsh are being read as signaling an additional FOMC rate hike, but the timing is uncertain. A re-escalation in the U.S.-Iran conflict and renewed global trade war risk are flagged as threats to the inflation outlook, increasing the probability of higher-for-longer policy. Net effect: downside risk to rate cuts and a potentially more hawkish rates backdrop.