Central Bankers Flock to Jackson Hole at Pivotal Moment
The Kansas City Fed's annual Economic Policy Symposium kicks off Thursday evening in Jackson Hole, Wyoming. Chair Jerome Powell in remarks on Friday is expected to unveil the Fed's new policy framework — the strategy it'll use to achieve its inflation and employment goals.
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Yahoo
18 minutes ago
- Yahoo
Dollar braces for busy week of geopolitics and Fed speak
By Rae Wee SINGAPORE (Reuters) -The dollar dithered on Monday ahead of a key meeting between U.S. President Donald Trump and his Ukrainian counterpart Volodymyr Zelenskiy, while investors also looked ahead to the Federal Reserve's Jackson Hole symposium for more policy clues. Currency moves were largely subdued in the early Asia session, though the dollar steadied after last week's fall as traders further pared back bets of a jumbo Fed cut next month. The euro was little changed at $1.1705, while sterling edged up 0.07% to $1.3557. Against a basket of currencies, the dollar advanced slightly to 97.85, after losing 0.4% last week. Markets are now pricing in an 84% chance the Fed would ease rates by a quarter point next month, down from 98% last week, after a raft of data including a jump in U.S. wholesale prices last month and a solid increase in July's retail sales figures dimmed the prospect of an oversized 50-basis-point cut. "While the data don't all point in the same direction, the U.S. economy looks to be in okay shape in the third quarter," said Bill Adams, chief economist at Comerica Bank. "The Fed is likely to cut interest rates by year-end, either in September, when markets now price in a cut, or a few months later, when Comerica forecasts a cut." The main event for investors on Monday is a meeting between Trump and Zelenskiy, who will be joined by some European leaders, as Washington presses Ukraine to accept a quick peace deal to end Europe's deadliest war in 80 years. Trump is leaning on Zelenskiy to strike an agreement after he met Kremlin chief Vladimir Putin in Alaska and emerged more aligned with Moscow on seeking a peace deal instead of a ceasefire first. Also key for markets this week will be the Kansas City Federal Reserve's August 21-23 Jackson Hole symposium, where Fed Chair Jerome Powell is due to speak on the economic outlook and the central bank's policy framework. "I think (Powell) will also talk about the current economic conditions in the U.S., and that will be more policy relevant, that will be more interesting to markets," said Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia. "Given market pricing is very high for a rate cut in September, I think the risk is that Powell is hawkish, or is perceived to be hawkish, if he gives a balanced view of the U.S. economy." In other currencies, the dollar rose 0.11% against the yen to 147.34, after falling roughly 0.4% last week. Japan's government on Friday brushed aside rare and explicit comments from U.S. Treasury Secretary Scott Bessent who said the Bank of Japan was "behind the curve" on policy, which appeared to be aimed at pressuring the country's central bank into raising interest rates. The Australian dollar was up 0.1% at $0.65145, while the New Zealand dollar rose 0.15% to $0.5934, after falling 0.5% last week.
Yahoo
an hour ago
- Yahoo
Oil falls on easing Russia supply concerns after Trump-Putin meet
By Florence Tan SINGAPORE (Reuters) -Oil prices slipped on Monday as the U.S. did not exert more pressure on Russia to end the Ukraine war by implementing further measures to disrupt Russian oil exports after the presidents from both countries met on Friday. Brent crude futures dropped 26 cents, or 0.39%, to $65.59 a barrel by 0028 GMT while U.S. West Texas Intermediate crude was at $62.62 a barrel, down 18 cents, or 0.29%. U.S. President Donald Trump met Russian President Vladimir Putin in Alaska on Friday and emerged more aligned with Moscow on seeking a peace deal instead of a ceasefire first. Trump will meet Ukrainian President Volodymyr Zelenskiy and European leaders on Monday to strike a quick peace deal to end Europe's deadliest war in 80 years. The U.S. president said on Friday he did not immediately need to consider retaliatory tariffs on countries such as China for buying Russian oil but might have to "in two or three weeks", cooling concerns about a disruption in Russian supply. China, the world's biggest oil importer is the largest Russian oil buyer followed by India. "What was primarily in play were the secondary tariffs targeting the key importers of Russian energy, and President Trump has indeed indicated that he will pause pursuing incremental action on this front, at least for China," RBC Capital analyst Helima Croft said in a note. "The status quo remains largely intact for now," Croft said, adding that Moscow will not walk back on territorial demands while Ukraine and some European leaders will balk at the land-for-peace deal. Investors are also watching Federal Reserve Chairman Colin Powell's comments at the Jackson Hole meeting this week to search for clues on the path of interest rate cuts that could boost stocks to more record highs. "It's likely he will remain non-committal and data-dependent, especially with one more payroll and CPI (Consumer Price Index) report before the September 17th FOMC meeting," IG market analyst Tony Sycamore said in a note. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
4 hours ago
- Yahoo
Volatility Vanishes Across Markets as Traders Brace for Powell's Jackson Hole Speech
A pervasive calm has taken hold of asset classes as traders look forward to Federal Reserve (Fed) Chairman Jerome Powell's speech at the annual Jackson Hole Symposium, scheduled for Aug. 21-23. Bitcoin's (BTC) 30-day implied volatility, as measured by Volmex's BVIV and Deribit's DVOL index, has declined sharply in recent months, hovering near two-year lows of around 36% last week, according to TradingView data. Similarly, the CME Gold Volatility Index (GVZ), which estimates the expected 30-day volatility of returns for the SPDR Gold Shares ETF (GLD), has more than halved over the past four months, dropping to 15.22%—its lowest level since January. The MOVE index, which tracks the 30-day implied volatility of Treasury notes, has also declined in recent months, reaching a 3.5-year low of 76%. Meanwhile, the VIX, widely regarded as Wall Street's "fear gauge," fell below 14% last week, down substantially from its early April highs near 45%. A similar vol compression is seen in FX majors such as the EUR/USD. Rates are 'still high' The pronounced slide in volatility across major assets comes as central banks, particularly the Fed, are expected to deliver rate cuts from restrictive territory, rather than amid a crisis. "Most major economies are not easing from ultra-low or emergency levels like we saw after the financial crisis or during COVID. They're cutting from restrictive territory, meaning rates are still high enough to slow growth, and in many cases, real rates, adjusted for inflation, are still positive. That's a big shift from the last easing cycles, and it changes how the next phase plays out," pseudonymous observer Endgame Macro noted on X, explaining the bull run in all assets, including cryptocurrencies and stock markets. According to the CME's FedWatch tool, the Fed is expected to cut rates by 25 basis points in September, resuming the easing cycle after an eight-month pause. Investment banking giant JPMorgan expects the benchmark borrowing cost to drop to 3.25%-3.5% by the end of the first quarter of 2026, a 100-basis-point decrease from the current 4.25%. Per some observers, Powell could lay the groundwork for fresh easing during this Jackson Hole speech. "The path to rate cuts may be uneven, as we have seen over the last two years, where markets have been eager for rate cuts and sometimes disappointed that the Fed has not delivered them. But we believe the direction of travel for rates is likely to remain lower," Angelo Kourkafas, a senior global investment strategist at Edward Jones, said in a blog post on Friday. "With inflation treading water and labour-market strains becoming more pronounced, the balance of risks may soon tip toward action. Chair Powell's upcoming remarks at Jackson Hole could validate the now-high expectations that, after a seven-month pause, rate cuts will resume in September," Jones added. In other words, the decline in volatility across asset classes likely reflects expectations for easy monetary policy and economic stability. Markets too complacent? However, contrarians may view it as a sign that markets are too complacent, as President Donald Trump's trade tariffs threaten to weigh on economic growth, and the latest data points to sticky inflation. Just take a look at the price levels for most assets, including BTC and gold: They are all at record highs. Prosper Trading Academy's Scott Bauer argued last week during an interview with Schwab Network that volatility is too low following the recent round of economic data, with more uncertainty on the horizon. The argument for market complacency gains credence when viewed against the backdrop of bond markets, where corporate bond spreads hit their lowest since 2007. That prompted analysts at Goldman Sachs to warn clients against complacency and take hedges. 'There are enough sources of downside risks to warrant keeping some hedges on in portfolios,' Goldman strategists led by Lotfi Karoui wrote in a note dated July 31, according to Bloomberg. 'Growth could surprise further to the downside,' dis-inflationary pressures could fade or renewed concerns over Fed independence may fuel a sharp selloff in long-dated yields. In any case, volatility is mean-reverting, meaning periods of low volatility typically set the stage for a return to more turbulent conditions.
