The Open Bell — Ep. 050 — 31 Aug 2026

Today on The Open Bell: The new Fed Chair used his first Jackson Hole speech to tell the world that another rate hike is back on the table, and the September odds just jumped to 60%, which is a long way from the cuts everyone was pricing in six months ago. Gold had the best month this century in August, up roughly 14%, and then one afternoon speech from a Fed Chair erased nearly 3% of that in a matter of hours, which tells you everything about how fragile this rally actually is. Germany's retail sales just fell 1.5% in July when everyone was expecting a mild 0.4% dip, and when the biggest economy in Europe can't get its shoppers to spend, the whole eurozone growth story gets a lot harder to tell. If today's episode helped things click, a five-star rating genuinely helps the next listener find the show. Hosted by Alex Monroe. New episodes every weekday morning at theopenbell.co Not investment advice. For informational purposes only. --- Chapters: 00:00 Introduction 00:13 Warsh's Hawkish Jackson Hole Speech Lifts Sept Rate-Hike Odd 03:20 Gold Tumbles 2.88% to $4,529.90 as Dollar Surges on Hawkish 05:33 German Retail Sales Slide 1.5% MoM in July, Deepening Eurozo 07:16 Closing thoughts

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Good morning, it's Monday, 31 August 2026, and this is the Open Bell. I'm Alex Monroe. By the time Asian Markets opened this morning, Kevin Walsh had already reshaped the week. One speech, one afternoon, and almost everything moved. Kevin Walsh walked up to that Jackson Hole podium on Friday and delivered the speech everyone was half expecting but still hoping to avoid. His first address as Federal Reserve Chair at the Kansas City Fed's annual symposium, the event where Fed officials set the tone for the months ahead. And he did not come to reassure anyone. Here's what that means for you directly. If you carry a variable rate mortgage, a credit card balance, or a car loan with a floating interest rate, the cost of that debt just got more likely to rise. Fed funds futures, the contracts traders use to bet on where the Fed's policy rate goes next, moved to price a 60% probability of a quarter point rate hike at the September, 15th, and 16th FOMC meeting, up from around 56% before Walsh spoke. Before this month began, a September hike was barely on anyone's radar. What pushed it there? Walsh said two things that landed hard. First, he recommitted explicitly to the Fed's 2% inflation target. No wiggle room, no softening. Second, and this is the phrase markets grabbed onto, he described financial conditions as not broadly restrictive. That matters because it's a shift from his own language after the July meeting when he called conditions uneven. The new framing signals that in his view, the current interest rate level, sitting between 3.5% and 3.3 quarter percent, isn't squeezing the economy hard enough to finish the job on inflation. Deutsche Bank called the speech a surprise in its specificity. Nomura flagged the market's new sensitivity to every piece of inflation data between now and mid-September. The next big one is the August Jobs report, due September 5th. A strong number would almost certainly cement the hike. A weak one might not be enough to stop it. There is one dissenting voice worth keeping in your head here. The chief market strategist at Miller Tabuk argues there's no empirical basis for a hike right now, that Walsh may be managing expectations rather than genuinely signaling an imminent move. It's a credible read. Central bankers do this. They talk tougher than they act to keep markets anchored. But the July PCE print, the Fed's preferred inflation gauge, which we covered Thursday, came in hotter than expected at 3.7% annually. That makes the it's just talk interpretation harder to hold. One more thing that is simply impossible to ignore. The president who appointed Warsh has been publicly demanding lower rates for months. Friday's speech put his own Fed chair squarely in the opposite corner. That tension doesn't resolve cleanly. Think about what it actually means for central bank credibility when the institution and the administration it nominally operates independently from our openly contradicting each other in the same news cycle, because that question is not going away. If Warsh's hawkish posture holds and the data cooperates, Forbes estimates roughly a full percentage point of cumulative rate increases over the next year. For a household with a $250,000 variable mortgage, that's real money every month. The Fed chair just told the whole room rates might go up again. And the president who hired him is definitely not happy about it. Gold felt that speech within minutes. By the close on Friday, it had fallen around $134 to just under $4,500 a troy ounce, a drop of nearly 3% in a single afternoon, its sharpest single session fall of the entire month. To understand why, you need one mechanism. Gold is priced in US dollars. When the dollar strengthens, which it did immediately after war spoke, as traders repriced the likelihood of higher US interest rates, gold becomes more expensive for buyers holding euros, yen, or pounds. Demand softens, price falls. That's the chain and it moved fast. What makes this striking is the context. August had been an extraordinary month for gold. Before Friday, the medal had climbed roughly 14% during the month alone, its strongest monthly performance this century. The trade driving that rally was essentially a bet that the Fed would cut rates or at least hold, the dollar would weaken, and gold would benefit as a store of value in a world of debased currency. Warsha's speech didn't just pause that trade, it reversed the logic behind it. But here's where it gets more complicated. Central banks around the world are buying gold at a record pace. The World Gold Council reported that sovereign institutions purchased nearly 290 tons in the second quarter of this year, a quarterly record and 60% above the same period last year. These aren't momentum traders chasing a rally. They're governments building reserves, and they were buying before the August surge and through it. That kind of structural demand doesn't vanish because one speech moved the price. Goldman Sachs has a year-end target of just under $5,000. JP Morgan sits at $4,500 for the fourth quarter. Even Bank of America, the most conservative of the three, is above current spot. The institutional consensus is that Friday was a pullback inside a bigger story, not the end of it. The next test comes September 10th, when USCPI, the broader consumer price inflation reading, lands, followed five days later by the FOMC decision itself. For anyone holding gold through an ETF or a retirement account, you're down nearly 3% from Thursday's close, but still up substantially for August. The month gave, one afternoon took some back. Across the Atlantic, the data arriving from Germany this morning tells a different kind of story. One about an economy that was supposed to be recovering, but increasingly looks like it's stalling again. Germany's Federal Statistics Office published July retail sales figures on Friday. And they missed badly. Sales fell 1.5% month on month, four times worse than the consensus forecast of a 0.4% decline and a sharp reversal of June's 1% gain. On an annual basis, growth slumped to just under 2%, down from nearly 5% in June. That is a 3% point deceleration in a single month. Germany has now recorded two consecutive years of economic contraction. The longest such run since the post-reunification adjustment of the early 2000s, the period that earned the country the label Sick Man of Europe. It clawed back that label eventually. But right now, the comparison is not flattering, and the data keeps reinforcing it. Elevated energy costs, weak demand from China for German exports, and households that simply aren't spending? These aren't new problems, but they're proving stubborn. The Euro weakened immediately after the release, falling against both the dollar and the yen. A weaker euro raises the cost of dollar denominated imports for European consumers, energy above all, which makes any recovery harder. The European Central Bank now faces an uncomfortable decision. Weak consumption in its largest member economy argues for rate cuts to stimulate growth. But ECB officials are waiting on Eurozone-wide inflation data due today before signaling anything. Growth and inflation are pulling in opposite directions, and the ECB has to pick a lane. German shoppers are the canary here. When Europe's largest consumer base stops spending, the growth numbers follow. And right now, they've clearly decided to hold on to their wallets. So that's where we start the week. A Fed chair who just raised the stakes on rates, a gold market digesting what that means, and Europe's engine economy flashing amber. The September 5th jobs report in the US is the number that could tip this week's outlook one way or the other. A strong print, and that 60% hike probability firms up considerably. A miss and the whole picture reopens. Either way, the tone has been set, and it came from a podium in Wyoming on Friday afternoon. If you want today's figures in writing, all the numbers, all the context, the newsletter has it, it's free, and it's linked in the show notes. That's the open bell. I'm Alex Monroe, have a sharp morning.