Treasuries slipped, pushing the US 10-year yield toward 3.05%. Oil scaled $93 a barrel. Gold and Bitcoin edged lower.
A rebound in stocks and bonds from June lows has left financial conditions at easier levels than before the Fed began its aggressive tightening campaign. The question is whether Powell will try to reset market expectations to ensure that the brakes continue to be applied to economic activity. “The Fed does have a lot of work to do in terms of just talking markets to price in a potentially higher terminal rate,” Diana Amoa, chief investment officer for long-biassed strategies, at Kirkoswald Asset Management LLC, said on Bloomberg Television.stressed the need to keep raising rates. Kansas City Fed President Esther George said that a peak higher than 4% can’t be ruled out. The bond market remains divided on whether the Fed will hike by 50 basis points or 75 basis points in September.
Jackson Hole may not be a “negative market shock because expectations are hawkish while exposure is still low,” said Dennis DeBusschere, founder of 22V Research. “We thought the market correction would be leading into Jackson Hole, and that has largely played out,” he said.in the first half of 2022, adding to the ongoing debate on the health of the economy.