Adept traffic models are critical to both planning and closed-loop simulation for autonomous vehicles (AV), and key design objectives include accuracy, diverse multimodal behaviors, interpretability, and downstream compatibility. Recently, with the advent of large language models (LLMs), an additional desirable feature for traffic models is LLM compatibility. We present Categorical Traffic Transformer (CTT), a traffic model that outputs both continuous trajectory predictions and tokenized categorical predictions (lane modes, homotopies, etc.). The most outstanding feature of CTT is its fully interpretable latent space, which enables direct supervision of the latent variable from the ground truth during training and avoids mode collapse completely. As a result, CTT can generate diverse behaviors conditioned on different latent modes with semantic meanings while beating SOTA on prediction accuracy. In addition, CTT’s ability to input and output tokens enables integration with LLMs for common-sense reasoning and zero-shot generalization.