Donald Trump says U.S. interest rates are already too high. Markets are increasingly betting that the Federal Reserve chair he appointed will raise them anyway.
At 5:20 p.m. EDT on August 31, Trump was asked whether he opposed Kevin Warsh considering another rate increase. “I think our interest rates are too high,” Trump said, while adding: “I have a lot of respect for him and he’ll do what he has to do.”
The comments expose the policy collision that has developed since Warsh’s Jackson Hole speech. Trump has previously said he would not have chosen Warsh to lead the Fed if he wanted interest-rate hikes. Warsh, however, used Friday’s speech to put inflation first and warn that policymakers still have “work to do” if price pressures are not moving toward the Fed’s 2% target fast enough.
Markets have moved toward Warsh’s side of that argument.
September Fed Hike Becomes the Leading Outcome
At 12:05 UTC on September 1, Polymarket priced a 25-basis-point September increase at 56.5%, against 41.5% for no change, 0.55% for a 25-basis-point cut and 0.65% for an increase of 50 basis points or more. Combined 24-hour volume across those four outcomes was about $5 million.
The repricing continued after that snapshot. At write time, Polymarket had moved to roughly 60% for a 25-basis-point increase and 40% for no change, with either a cut or a 50-basis-point-plus hike still below 1%.
That makes a hike the modal outcome less than three weeks before the September 15-16 FOMC meeting.
The exact probability depends on the market and measurement time. CME FedWatch was cited at 60.4% on August 31, after Warsh’s speech, while September 1 reporting based on fed funds futures put the probability above 66%. Trading Economics subsequently put the figure around 68%. The useful read is therefore a roughly 60%-68% range, not one definitive number.
Jackson Hole’s Rate Repricing Has Reached Stocks
FinanceFeeds covered the first leg of this move on August 28, when [Warsh’s Jackson Hole warning sent September hike odds sharply higher even as stocks rose]. The market reaction has now inverted.
Tuesday’s premarket had Nasdaq-100 futures down 1.19% to 29,163.25, Dow futures off 341 points to 52,899, and S&P 500 futures down 0.62% to 7,651.50.
WTI October crude was up 2.44% at $87.85, while Brent traded near $90, adding another inflation-sensitive input to a market already reconsidering the Fed’s next move. Comparable premarket readings showed Nasdaq futures down more than 1%, S&P futures around 7,652 and WTI at $87.85.
The selling carried into regular trading. Yahoo had the Dow down about 0.7%, the S&P 500 off 0.8% and the Nasdaq down 1.3% during Tuesday morning as higher yields and oil prices weighed on risk assets.
Treasury Yields Are Reinforcing the Message
The 10-year Treasury is telling the same story, although live readings vary slightly between providers.
Earlier Tuesday, Yahoo showed the yield around 4.75%, while Trading Economics had it at 4.79%. By write time, Yahoo’s live market coverage had the 10-year near 4.78%, while Trading Economics showed about 4.80%.
Trading Economics described the move as a fifth consecutive session of rising yields and the highest level since January 2025. That is its stated historical scope.
The contrast with Trump‘s position is now difficult to miss. The White House wants cheaper money and Trump believes a stronger U.S. economy should justify lower borrowing costs. Warsh is looking at inflation above target and leaving another increase firmly on the table.
After Jackson Hole, traders merely raised the odds.
Three days later, a September hike is the outcome markets are pricing most heavily.