On Thursday, The Jackson Hole Economic Symposium will feature Fed Chair Jerome Powell’s opening remarks. This is a critical turning point for stock markets. Markets want to know about Powell’s opinions on inflation, job growth, and its impact on monetary policy.
U.S. Treasury yields are already priced for a rate cut next month. The long-term 20+ Year Bond ETF (TLT) is up by 19.15% from its $82.16 low set last November 2023. It gained 5.35% in the last month. Markets are oddly not concerned about the persistently high interest rates. They are betting that the over 5% interest rate era is coming to an end.
Chair Powell may hesitate to cut interest rates. CPI is 2.9%. People are more concerned about CPI data than core PCE, which excludes the volatile food and energy sector. Yet those are two goods that people consume daily.
Job markets are strong, thanks mostly to jobs created by government and healthcare firms. However, Cisco (CSCO) and General Motors (GM) are some firms announcing more job cuts. This will not show up in the upcoming jobs report.
The volatility index (VXX) returned to the $44.43 level, after spiking at over $90 during Japan’s Black Monday moment. The VXX decline suggests that stock indices will not move anywhere until after the Jackson Hole event.
