Reassurance from Warsh gives the dollar a boost

Fed Chair Warsh’s much-anticipated keynote speech at the Jackson Hole symposium has allayed some of the confusion caused by his post-FOMC remarks a month ago. More clarity around his approach to both the near-term policy outlook and the Fed’s overall framework may help long-end Treasuries and the dollar regain their footing in the near term. Our view remains that the FOMC is on track to tighten policy later this year, which points to a somewhat flatter US yield curve and a further rebound in the greenback.