The markets walk on the water before Jackson Hole’s speech by Powell

This week, actions cannot really bring together the courage to bounce back with the kind authorization of mixed -opposite winds in key data.

The trajectory on the markets has generally increased at the time of the summit organized by the Fed of Kansas City. In 2024, Monday before the start of the Wyoming conference, the S&P 500 was 5,608. A week later and after the conclusion of the event, the index was 5,616. In 2023, the story was similar, up 4,399 to 4,433.

This year, the markets show lower signs. The S&P 500 closed a touch yesterday 0.01% while the Dow Jones fell 0.076%. The Nasdaq was up 0.03%.

In Europe, the London FTSE increased 0.2% at the start of negotiation, the Dax up 0.16% and the Paris CAC 40 is up 0.54%. In Asia, the Nikkei 225 is slightly down 0.38%, the Hang Seng of Hong Kong is down 0.2%while the Nifty 50 of India is up 0.3%.

Even if European leaders descend to Washington DC this week to support Volodymyr Zelensky of Ukraine in its fight against Russia, the markets are still examining geopolitics and focus on monetary policy titles at the end of the week.

“We suspect Powell will not seem as dominant as market prices,” said Bank of America in a note to customers this morning. “Powell’s comments will probably be more balanced than at the July FOMC meeting since the July work report recalls on the rising risks of the unemployment rate.”

“We suspect that the reaction of Jackson Hole Instinctive will be different in ’25 vs for the most part of Powell’s mandate. The biggest driver of short -term FED political perspectives will probably be the September 5 employment report, which occurs 2 weeks after Jackson Hole,” said the note.

Previous hopes that Jackson Hole would provide the platform for a rate reduction signal was available day by day. Previously, Fedwatch of CME estimated a reduction in September at more than 95%. Now, this figure drops day by day, currently being 83%.

The wings of dominable speculators have been triggered by the producer prices index (PPI) which came a little hotter than expected, and suggested that the inflation linked to the prices takes place in business and could soon land in consumer towers. In addition, the consumer price index last month has returned cooler than fearing, but has always referred to the underlying tension while basic inflation was greater than 3%.

This contradicts the disadvantage of the surprise of the Bureau of Labor Statistics and its unworthy revisions of the Landscape of Employment. The Labor Department said that the payroll increased by 73,000 people last month, well below forecasts of around 100,000. But downward revisions for the previous months have alarmed investors even more, revealing that the labor market has stopped almost in the spring. The May’s count was reduced by 144,000 to 19,000, and the total of June was reduced from 147,000 to only 14,000, resulting in a combined drop of 258,000. The average gain in the last three months is now only 35,000.

Less and less convinced

Despite a certain number of people within the Federal Open Market Committee (FOMC) suggesting that they would like to see a reduction in the days that followed the labor market report, analysts always hide some of their bets on a reduction (and increased economic activity).

“We received a series of economic data last week, but the real market mover awaits us this Friday: the next Jackson Hole address of President Powell,” Wharton professor Jeremy Siegel wrote this week. Writing for Wisdomtree, where he is main economist, Siegel added: “Although inflation data is partially surprised – in particular the PPI with its net leaping of portfolio management – the underlying history remains that pricing pressure does not accelerate the most closely in the fields that the Fed is watching.

“In fact, some eminent economists have lowered their estimate of the inflation of the PCE of five base points, despite the sound of the title. It is a revealing sign. This suggests that central inflation, when it is adjusted for statistical anomalies, is largely in line with the Fed path towards relaxation. ”

Siegel has long been pressure for rates to drop, claiming that monetary policy was too restrictive given the health of the economy. He also argued, like many, that the Fed must “see through” inflation linked to prices as a single hike as opposed to a fundamental change in the economy.

“We will get another job report and an impression of inflation before the Fed’s September 17 meeting, but Jackson Hole’s speech will set the tone,” added Siegel. “If Powell recognizes the cooling of the labor markets and the benign trend of the basic PCE, he opens the door to a 25 -point cup. If he underlines the need for more data and minimizes recent sweetness, the markets will take it as a bellicist signal and that I expect the risk markets to react negatively. ”