Market awaits Jackson Hole Symposium

After last week’s drop in inflation and strong GDP figures saw a bullish run for the Pound, traders attention switches Stateside with Fed Chair Jerome Powell attending the central bank symposium in Jackson’s Hole, Wyoming.

With the Federal Reserve stalling on rate cuts in July after unexpected poor jobs figures and weaker inflation, markets have since stabilised with recession fears easing as talk of an emergency rate cut in between meeting was cooled on. The question going into the meeting is not whether Powell will cut rates, but by how much with many predicting a 50 basis point cut.

The Fed is now expected to cut rates in every meeting it holds from next month until June 2025, Powell’s speech could mark the start of a busy period for central bankers. Stocks could well react poorly should we not get clear signs of further cuts.

Worth noting that Bank of England Governor Andrew Bailey is also expected to attend Jacskon’s Hole whilst on holiday in nearby Idaho, where he could potentially discuss policy sentiment with those in attendance.

Asian currencies have rallied to the highest level for several months as US recession fears ease and domestic sentiment improves. The South Korean Won and Malaysian Ringgit were amongst the best performance as the Thai Baht also gained after the newly elected Prime Minister Shinawatra eased political tensions.

On the politics front, the Democrat National Convention gets under way in Chicago, as polls now indicate a remarkable turnaround for Kamala Harris with a 49-45 lead over trump with registered voters, and 51-45 percent among likely voters in a two-way race.

Elsewhere, we anticipate a rate cut by Riksbank in Sweden tomorrow with a cut fully priced in, the only debate being whether they go by 25 or 50 basis points. After the Nikkei’s recent crash, talk of rate hikes from the Bank of Japan had all but evaporated, however Friday’s consumer price report for Japan could reignite a hike, with many calling for a 25 basis point climb to 0.5%.

Fiscal Insiders: August 2024

In this month’s edition of Fiscal Insiders, we talk to our Senior Portfolio Manager Christopher Taylor?about events that shaped the market in July and what’s still to come in August. Read the full article to find out more about how these events could affect your business: https://www.fiscalfx.co.uk/fiscal-insiders-monthly-update-august-2024/