A look at the day ahead in U.S. and global markets from Mike Dolan.
With just four hours to Jerome Powell’s podium appearance at Jackson Hole, all the ‘ifs’ and ‘buts’ have been debated and the jerky last minute market positioning done and dusted.
The only worry left is that it might be a damp squib.
The Federal Reserve chief delivers his hotly-awaited speech at 1000 EDT. (1400 GMT)
But the barrage of comments and interviews from his Fed colleagues over the past 24 hours leaves markets with little new to chew on about the policy trajectory.
Interest rate futures go into the setpiece with a much more hawkish bias compared to early August, putting the Fed’s peak ‘terminal’ rate early next year at about 3.8%. Yet that’s still below the 4% peak they expected in mid June and there’s still at least one rate cut penciled in from there to the end of 2023.
Powell’s unlikely to be specific about next month’s decision, preferring to wait for critical jobs and inflation data out before then. An easing in July of the Fed’s preferred inflation measure – the core personal consumption expenditure index – will likely be seen before he speaks later.
That said, futures are again leaning to 60% chance of another 75 basis point hike at the September meeting.
One possible focus is that Powell avoids detailed guidance on ‘peak rates’ but emphasises that they are unlikely to be cut next year at all. Any finer points on the Fed’ balance sheet rundown will also be lapped up, with some analysts now fearful…