The markets are still the price in September, but Powell to Jackson Hole may not be the allusion once believed

The markets hoped for another signal of their estimates this week, at the Jackson Hole Symposium held by the Federal Reserve Bank of Kansas City. Jackson Hole has previously been the site of tidal changes in monetary policy, spectators largely expecting President Jerome Powell maintaining tradition at the end of the week.

But as the summit gets closer, the data no longer turns away from a cut scenario, and the probability of a lower decrease is more tenuous.

A week ago, the chance of a September Cup was at the price of more than 95% by the market. At the beginning of a week that would otherwise have firm this belief, the chances are lower. According to Fedwatch of CME, the chances that the basic rate is lower than 4% and 4.25% is now less than 85%, with 15.2% of restraint.

The markets are flat this morning while the events of the end of last week (namely, the meeting of President Trump with the Russian president Vladimir Putin) did not do enough to move the dial of the perspectives for the best or for the worse. Before the bell, the S&P 500 is down 0.3%, the NASDAQ fell 0.4%and the DOW up 0.08%. S&P term contracts are down 0.08%.

In Europe, the FTSE 100 is flat, the Dax of Germany down 0.3% and the CAC dropped by 0.6%. In Asia, the Nikkei 225 is up 0.77%, the SSE increased by 0.85%and the hang song index of 0.37%.

The markets have a good preceding to look towards the end of the week (the symposium takes place from Thursday to Sunday) for major economic titles. As Deutsche Bank customers noted to customers: “The Fed chair speech to Jackson Hole was often used to send important political signals, and it was last year that Powell said that” time had come for politics to adapt “before reducing prices at the next meeting for the first time since the speech of the pandemic. Expect an overview of these subjects. »»

The opinion of the framework examination is particularly interesting, Henry Allen, a macro strategist at Deutsche, added in his note. The last time that such a concluded framework was in 2020 and led to the way to the average inflation targeting. Essentially, the FED would examine the periods when inflation had been constantly less than 2% (over the duration of the 2010 years, for example) and would allow a policy that supported higher inflation to the target of 2% to counter the overall calendar.

“The Fed also reinterpreted its approach to full employment, in the sense that a tight labor market was not a reason to increase rates. So, this implied a distance from the preventive approach by which the Fed would tighten the policy to get ahead of future inflation as the labor market is tightened,” wrote Allen. “Of course, we now know that shortly after the review of the executive, there was a major inflation burst, and although he had many drivers, our American economists concluded in a note on Friday that the new framework contributed to this overtaking.

“So, this time, they expect Powell’s speech to make the 2020 change back and restore a main role for preemption.”

If the Fed decides to take an opinion in the longer term on inflation, those who hope for a reduction can be disappointed. Since 2021, inflation has remained constantly above the target of 2%, analysts suggesting that new pressures drop the graceful pike of President Trump’s pricing plan.

A clear change

Not even a week ago, the secretary of the Treasury Scott Bessent was not only confident of a September Cup, but also wondered if a more important cup could be justified. The pressure for a reduction came from a report on the shock jobs of the Bureau of Labor Statistics, which revealed that the job market was in good shape this summer than expected.

The deposit of a Cup by the market has increased accordingly, expecting the Federal Open Market Committee (FOMC) to rush to the maximum employment side of its double mandate. A better than expected consumer inflation report has added to confidences, although the most conveniently neglected the fact that inflation of the nucleus has now increased by more than 3%.

However, the price index of July producers (PPI) has paid a little cold water on excitement, showing the fastest increase since March 2022 and suggesting that, although the Pass-Through rate has not yet completely hit consumers, it is bleeding in the national economy.

Indeed, the data was sufficient to push Bank of America next to the minority: this Powell will not announce any change at the basic rate next month.

World economists Claudio Irigoyen and Antonio Gabriel wrote on Friday: “With inflation mainly stuck in the past year, the Tariff we are still expecting, and the history of work supply keeping the unemployment rate historically low, we always think that there is a solid argument for the Fed will remain pending. We will see next week if Powell holds the line or not, and then the accent will be on the next report on jobs. ”

Here is an instantaneous action before the opening bell in New York:

• Future S&P 500 were flat on Monday morning.
• Stoxx Europe 600 dropped by 0.1% early trading.
• The FTSE 100 of the United Kingdom dropped by 0.1% early trading.
• Nikkei 225 from Japan increased by 0.77%.
• CSI 300 from China increased by 0.88%.
• Nifty 50 of India was up 1%.
• Bitcoin refused to $ 115.180K.