Jackson Hole history points to Powell sidestepping market shocks

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If Treasury and U.S. stock markets are betting on one thing from Jerome Powell at the Jackson Hole symposium Friday, it’s this: He’ll play it safe.

Carl Tannenbaum, Northern Trust, Chicago Fed, Jackson Hole, economist, joins BNN Bloomberg and talks about the rate roadmap for the U.S. Fed.

By some measures, the annual gathering of policymakers and academics in Wyoming is expected to be an uneventful one. Strategists from JPMorgan Chase & Co. and Deutsche Bank AG expect moderate moves for bonds during the conference while options traders are betting on small swings for stocks in the days ahead. Recent history is on their side.

“Jackson Hole speeches have not traditionally led to large yield moves,” JPMorgan strategists wrote on Aug. 16. “It is unlikely the Chair will offer too much granularity on the magnitude or pace of easing given the importance of the upcoming August employment report.” For now, volatility appears to be fading. With the Fed chair likely to imply that tight monetary policy is no longer warranted, options traders are positioning for a move of about six basis points in 10-year futures Friday. That pales in comparison to the 19-basis-points tumble yields notched on Aug. 2 when a jobs report showed that the unemployment rate jumped to the highest in almost three years.

 

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