As the Jackson Hole speech approaches, Wall Street firms collectively urge: it is essential to clearly signal a commitment to combating inflation.

This Friday, Federal Reserve Chairman Kevin Warsh will deliver a keynote speech at the Jackson Hole Global Central Bank Annual Meeting. As U.S. Treasury yields remain persistently high and inflation in the U.S. has exceeded the 2% target for five consecutive years, several Wall Street institutions, including JPMorgan, Apollo Global Management, and Morgan Stanley, are unanimously calling for Warsh to clearly demonstrate the Federal Reserve's strong commitment to combating inflation in this speech. Market logic: A strong anti-inflation stance can lower long-end yields. Investors widely believe that if Warsh communicates a tough stance on price stability clearly in his speech on Friday, it could trigger buying in 30-year Treasury bonds, thereby lowering long-end yields. Last week, the yield on 30-year Treasury bonds briefly rose to 5.34%, the highest level since 2007. This move would also support U.S. Treasury Secretary Scott Bessenet, who has already implemented several measures, including repurchasing long-term bonds, in an attempt to curb the selling of long bonds and alleviate the increasingly burdensome interest costs in the U.S. However, despite intervention from the Treasury Department, the yield on 30-year Treasury bonds has remained above the 5% mark for nearly two months. Persistently high borrowing costs continue to put pressure on the U.S. real estate market, private equity firms, and small businesses. Since the July policy meeting, Warsh's ambiguous communication style has left investors perplexed and raised doubts in the market about the Federal Reserve's determination to control inflation. At the post-July meeting press conference, Warsh refused to clarify how policymakers would respond to different economic scenarios, and some of his comments were interpreted by certain market participants as suggesting the Federal Reserve might adjust its inflation target in January, directly triggering a sell-off in long bonds. Priya Misra, a portfolio manager at JPMorgan Asset Management, stated that if Warsh can clearly state that combating inflation is the top priority in this speech, then "concerns about the Federal Reserve's credibility in the market will ease." Misra added that Warsh's strong stance on high inflation would suppress the term premium. Vishal Khanduja, head of broad market fixed income at Morgan Stanley Investment Management, also noted: If the Federal Reserve focuses on inflation, the term premium should decline sharply, because the Federal Reserve's credibility would significantly increase. The term premium measures the extra compensation that investors require for bearing the risk of holding long-term U.S. Treasury bonds. A term premium indicator tracked by the New York Fed is approaching its highest level since 2014. Institutions are collectively calling for: Warsh must provide a clear framework for guidance. Jay Barry, head of global rates strategy at JPMorgan, stated that if Warsh retracts some of his vague expressions on Friday, "it could lead to a flattening of the U.S. Treasury yield curve." This occurs when short-term rates rise faster than long-term rates. Apollo Global Management's chief economist Torsten Slok emphasized that Warsh "must provide a clearer statement than he did at the July press conference." Slok stressed that while Warsh does not need to disclose the Federal Reserve's next rate actions in advance, he must comment on the current inflation situation and the labor market to clarify his policy priorities. Slok warned: If he cannot provide any framework guidance, the risk is that long-term rates will see a larger upward movement. Slok further pointed out that the U.S. Treasury yield curve faces multiple upward pressures: the long end is burdened by a historic debt load exceeding $40 trillion; the short end remains elevated due to stubborn inflation; and the mid-end is under pressure due to large-scale borrowing by AI giants. He stated: "There is a risk that the entire yield curve will move higher." Warsh's speech also provides a window for the market to observe the macroeconomic outlook the August employment report will be released next week, and consumer price index data will be published a few days before the Federal Reserve's next policy decision on September 16. Currently, federal funds futures show that the market expects a roughly 35% probability of a 25 basis point rate hike next month. Kevin Flanagan, head of investment strategy at WisdomTree, commented: "The ultimate arbiter remains the data itself, which will also be the focus in the market following Warsh's speech. The two-year yield is still above the federal funds rate, reflecting the uncertainty premium surrounding Warsh and indicating that even with some softening in July employment and inflation data, the market has not fully ruled out the possibility of a rate hike."