And now let's go out to Chicago to see how Friday trade is setting up. Now, CBOE floor traders are anticipating Fetcher Kevin Warsh's press conference, actually his symposium from Jackson Hole, Wyoming. Now, that speech is slated to take place in about an hour from now. So let's welcome Errol Coleman, who's live from the floor in Chicago. Hi, Errol. Good morning and happy Friday. So we are all anticipating Kevin Warsh's comments. So break down the pre-market action that you're watching.
No, thanks, Remy. Yeah, over the last couple of weeks, I mean, we've seen a lot of lack of volatility. And given the range bound market we've seen over the last 24 hours, I think traders are looking for a little bit more clarity more than anything else from Kevin. And he probably isn't going to come out and say we're hiking in September or we're going to stay hold. I think what traders really want to understand is his reaction function. What is worse actually need to see in the data to move rates one way or another. And right now the Fed is dealing with an interesting setup. Right. I mean inflation is still running above target while parts of this labor market and growth picture have pretty much softened. So traders want to know which risk is more which risk they should be more concerned about. And from a trading perspective I'd be watching the Treasury market very closely, and particularly the two-year yields, because it's highly sensitive to expectations around Fed policy. And if you don't trade Treasuries or futures or follow yields directly, you can also watch TLT, which is an ETF that tracks longer-duration U.S. Treasury bonds. And just remember that bond prices and yields generally move in opposite directions. There's that inverse correlation there. So if yields move higher, you typically expect TLT to move lower and vice versa. So if Worshlein's hawkish talking about persistent inflation and keeping another hike firmly on the table, You could see yields move higher. Maybe TLT comes a bit under pressure. Maybe the dollar gets a bit stronger and potentially some pressure in the equities markets, maybe particularly longer duration and rate sensitive names. And if he focuses more on slowing growth or weakening or weakness in the labor market, you could see the opposite happen. Maybe yields come down, maybe TLT goes higher and risk assets potentially catch a bid. But Remy, there's also a third outcome that I think a lot of traders discount. Maybe he doesn't give us much at all. And in that scenario, we could get an initial headline driven move that ultimately gets faded because the market still doesn't have enough information to necessarily materially change its expectations for the Fed's next meeting. So I wouldn't necessarily focus on trying to predict the exact words Warsh uses. Just watch how rates react to those words, and the Treasury market and even some assessable at TLT can give traders a pretty good read on whether Jackson Hole will actually change expectations for the Fed's next move.
Yeah, and Errol, as you mentioned, we've been seeing a lot of volatility across the bond market, in particular yields in the U.S. as well as global treasury yields. But usually when we're talking about the annual Jackson Hole symposium, depending on the year, it's usually a snooze fest. But given the fact that, as you mentioned, Warsh hasn't provided any forward guidance and there's been a lot of volatility in the bond markets as well as uncertainty, give us a sense of the sentiment on the trading floor over in Chicago. Chicago right now.
Yeah, right now, again, it's the pre-market right now. So we're waiting for market open. But you can already kind of just feel the energy coming into this room. I think whenever we have such a binary event coming in within the hour of market open, traders are typically kind of on their toes. And I think a lot of guys back here are ready for a lot of the volume and a lot of the action that's to come, especially with Jackson Hole being on a Friday. And again, volatility has been trading at around 15 over the last couple of weeks. It's felt very slow, but from a historical standpoint, that's actually about the average. We just have been pretty spoiled lately. So I think these guys coming in here right now, I think the fight to give the floor rating a one out of 10 right now on energy. I'm going to give it a 5.5, which is pretty high considering the market hasn't opened just yet, but it will most likely jump to a nine.
Well, a lot to focus on as we head into the rest of the morning. So, Errol, thank you so much for joining us this morning. And thank you so much for giving us your perspective from Chicago.
Thanks, Remy.
