All eyes on Jackson Hole
The United States Federal Reserve is once again in the driving seat this week when it comes to potential macro price triggers for risk assets.
Fresh from last week’s Federal Open Markets Committee (FOMC) meeting, Fed officials, together with banking figures from around the world, will meet for the annual Jackson Hole symposium on Aug. 25-27.
This year’s gathering comes at a critical time for markets in the U.S. and further afield. Inflation under the Fed’s jurisdiction appears to have begun cooling, while elsewhere, the opposite story remains true.
The latest U.S. inflation data is still weeks away, but that might not stop Fed Chair Jerome Powell from giving strong hints as to how the Fed will react, as well as positioning expectations regarding future economic policy.
With that in mind, volatility could easily pick up both before and during the event, making Jackson Hole a key item to watch on traders’ radar.
“They are so focused on doing this partly just because they screwed up last year with the whole ‘transitory’ thing, and they realize that the one thing they can do now is tighten policy, and that will slow inflation,” Kevin Cummins, chief U.S. economist at NatWest Markets in Stamford, Connecticut, told Bloomberg.
With that, it remains to be seen whether the market will shift to favor another 75-basis-point funds rate hike in September or gravitate toward a lower 50-point raise.
In a preview of its Jackson Hole comments circulating online, Bank of America said that it would “continue to look for 50bp rate hikes in September and November, plus an additional 25bp rate hike in December.”