By Andrew Ross Sorkin and Bernhard Warner, Kevin Warsh faces a major test on Friday with his first Jackson Hole Economic Symposium speech as Fed chairman at 10 a.m. Eastern. Warsh, under pressure from investors as inflation persists above the central bank's 2 percent target, risks losing credibility just three months into the job if he fails to clearly address concerns, according to some on Wall Street. The war with Iran has complicated the Fed's task further.

Key questions loom: Will Warsh drop his aversion to offering guidance? Futures markets expect one rate hike this year, which would likely anger President Trump, who has pushed the central bank to do the opposite. Fed officials and economists remain divided on the next policy move even as inflation rises. Fed chairs often use Jackson Hole to telegraph future actions—Jay Powell did so last year.

How concerned is Warsh about the bond market? At his July news conference, he suggested rising bond yields might be doing the Fed's tightening work. Investors sold off government bonds, pushing the 30-year Treasury yield to a multidecade high. Treasury Secretary Scott Bessent has since announced market interventions, including bolstering the Japanese yen and buying long-dated Treasuries, moves that may conflict with the Fed's rate-raising focus. Bessent has also downplayed inflation harms, potentially adding friction with bondholders.

Apollo's Torsten Slok told Bloomberg Television that Warsh must deliver something clearer than his July press conference.