Fed Chair Kevin Warsh Pushed September Rate Hike Odds Past 50%. But 1 Investor Says the Market Has It Wrong
Kevin Warsh just sent September rate hike odds above 50%, but at least one prominent investor thinks the bond market is making a serious mistake and that NVIDIA traders may be the ones who get the last word.
Three weeks before the Sept. 16 FOMC meeting, the bond market has flipped hawkish. Market-implied odds of a September rate hike jumped to roughly 55% after Kevin Warsh’s Jackson Hole debut as Fed chair, up from about 40% a week earlier, even though the Fed’s last move was a cut on Dec. 10, 2025 and the target has been pinned at 3.75% ever since.
Warsh telegraphed the shift.
His line that “it’s hard to say that Fed policy is restrictive when you look at the economy right now” was read on CNBC as a straight hike signal. Former Fed Vice Chair Roger Ferguson said on August 28 that he expects two rate hikes and warned that standing pat would cost the Fed credibility.
The contrarian: CNBC Investment Committee member Bill called the 55% probability “offsides,” arguing Warsh softens once data clears.
Stocks Are Shrugging
The 10-year Treasury yield hit 4.66% on August 26, up from 4.19% in January, yet the S&P 500 tracking ETF is still up about 13% year to date. The earnings counterweight: NVIDIA (NASDAQ:NVDA | NVDA Price Prediction) just posted $96.22 billion in Q2 revenue and guided Q3 to $108.0 billion, with $279 billion in supply commitments locked in.
Profit angle: If Bill is right and Warsh blinks on Sept. 16, NVDA is the highest-beta way to press the trade. Its approximately 70% fiscal 2028 growth outlook is largely insulated from short-term rate moves.
Watch for the August CPI and PPI: hot readings validate the hike, cool readings weaken the odds and re-rate mega-cap growth higher. Shares traded near $220 on Monday. Aug. 31, up 16.50% year to date.
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Joel South covers large-cap stocks, dividend investing, and major market trends, with a focus on earnings analysis, valuation, and turning complex data into actionable insights for investors.
He brings more than 15 years of experience as an investor and financial journalist, including 12 years at The Motley Fool, where he served as an investment analyst, Bureau Chief, and later led the Fool.com investing news desk. He has also co-hosted an investing podcast and appeared across TV and radio discussing market trends.
