The 2023 Economic Policy Symposium – "Structural Shifts in the Global Economy" – will be held August 24-26 at Jackson Hole.
According to Piper Sandler analysts, history shows that the average Jackson Hole trading day doesn't tend to cause more market volatility than any other regular trading day.
While they are not ruling out the possibility of Jerome Powell, the Federal Reserve Chairman, making market-moving statements on August 25 during the Jackson Hole Economic Symposium, the likelihood of substantial market disruption appears limited.
“The Chair might spill ink and draw breath underscoring that the end of hikes, whenever it comes, won’t mean restrictive monetary policy is over. Yes, we know this already. Even after the 100 bps of cuts the June dot plot implies for 2024, the latest 4.625% median for that year remains well greater, a falsely precise 212.5 bps, than their 2.5% “long-run” projection (roughly nominal neutral),” Piper Sandler analysts wrote.
“Still, especially considering that so-called r-star is no robust lodestar, without careful wording there is some risk that this clarification on life after hikes mistakenly comes off dovish, as some sort of “pivot.””
A potential challenge that could arise is that as time goes on, the significance of the 100 basis points of rate cuts projected for 2024 will demand additional clarification.
“Powell may take the opportunity next Friday to disabuse investors that cuts are right around the corner, with ample retread on how far they still are from their price objective, peppered with his greatest hits on the scourges of inflation,” analysts added.