Bond market anxiety raises stakes for Warsh's debut Jackson Hole speech

While Trump has so far withheld any criticism of Warsh, whom he chose for the top Fed job, for not cutting interest rates, as the president consistently demanded of Powell, Warsh's reluctance to talk about policy has left open questions about both his evaluation of the economy and whether he is holding back on his view of rate hikes to avoid angering Trump.

In the minutes of the July 28-29 meeting, some of Warsh's colleagues worried that waiting to hike rates would require steeper and costlier increases in borrowing costs later, while others worried that the longer inflation remains above 2% the more likely the public is to lose faith in the Fed's commitment to its target.

The bond market's behavior may be reflecting those concerns, said Maurice Obstfeld, a former International Monetary Fund chief economist who is now a senior fellow at the Peterson Institute of International Economics.

"He's clearly finding his feet and operating in a very charged environment," given upcoming U.S. midterm elections that could alter the final half of Trump's second term in the White House and volatile bond markets, Obstfeld said.