The fed will not let markets clear
Today will be the event that investors were waiting for the beginning of the week. In recent days there were many speculations as to which approach will choose the head of the fed during his speech at the Jackson hole Symposium. But those who hope to clarify the situation regarding the September decision of the regulator and the prospects for monetary policy in General, may be disappointed. In order not to drive yourself into a trap, Powell probably will refrain from concrete statements and signals, mostly due to the fact that while he did not know what steps to take in the future.
Since the July rate cut, the situation in the US economy has not improved, although inflation accelerated and the labor market remains stable. A trade war with China escalated, and despite the fact that a new round of negotiations will take place in September, hopes for a breakthrough in relations is not enough, especially given the attitude of the tramp against Huawei and its new tariffs. Inversion of yield curve signals a recession, but part of investors themselves dispersed growth bonds, thereby fueling their own fears.
The overall situation really looks ambiguous. In addition, in the camp of the FOMC there is a split – some members of the Committee oppose any further policy easing at this stage and argued that the regulator has taken a wait. Against this background, markets are unlikely to get clarity from Powell that he is able to put pressure on risky assets. However, the lack of clear signals about reducing the cost of lending could invigorate the dollar.
Academy of management Finance and investment