Reply To: Traders Market Weekly: Jobs, Inflation and PMI Pressures


Eyes on Jackson Hole:

The Federal Reserve’s Jackson Hole Symposium annual retreat by central bankers to the Tetons is getting more attention than normal with U.S. equities appearing to be factoring in a tamer fight against inflation than FOMC speakers have tipped off in their speeches and dot plots.

Fed Chairman Jerome Powell is expected to dig in a bit and establish his hawkish credentials. The tone from Powell could shift investor sentiment if he reiterates that the risks of inflation are more significant than the risk of a hard landing for the U.S. economy. The Fed is still anticipated to raise the target range for the federal funds rate by 50 or 75 points in September and follow with 25 or 50 points hikes in November and December. Fed watchers are also looking for more details on the Fed’s balance sheet reduction strategy.

nvestors will be keeping their ears perked for any clues on the trajectory of the Fed’s interest-rate increases.
Traders are currently pricing in a 54.5% probability of a half-percentage-point increase at the Fed’s September policy meeting and 45.5% odds of a 0.75-percentage-point raise, according to CME Group’s FedWatch Tool.