SCHEDULE: Jackson Hole Economic Policy Symposium: Reassessing Constraints on the Economy and Policy

Friday, 26th August

• N/A - Fed's Bostic (2024 voter, Neutral) on CNBC


• 14:00BSTS/09:00ET - Fed's Harker (2023 voter, Neutral), Bullard (2022 voter, Hawk), and Bostic (2024 voter, Neutral) on Bloomberg TV


• 15:00BST/10:00ET - Fed's Powell (Voter, Neutral) - "Opening Remarks"

Saturday, 27th August

• 17:25BST/12:25ET - ECB's Schnabel (Neutral), ECB's Villeroy (Neutral) & SNB's Jordan - "Outlook for Policy Post-Pandemic"

Analysis details (06:14)

Fed Chair Powell primer:

• 
  SEPTEMBER HIKE SIZE: Traders are seeking clues on the size that the Fed will raise rates at the September 21st FOMC. Currently, the market is pricing around 40% chance of a 50bps rate rise, and a 60% chance of a 75bps move (the Federal Funds Rate target is presently at 2.25-2.50%, which the Fed considers neutral). However, Powell will likely reiterate that the Fed's decision will be based on incoming data within the context of its goal to bring inflation back down to target. Accordingly, the US jobs report on September 2nd and the US CPI Report on September 13th will be the prime catalysts, and therefore, there is a chance that Powell could disappoint on that front today.


• 
  TERMINAL: Additionally, traders will be looking for clues on where the Fed now thinks the Terminal Rate is; in its June forecasts, the Fed estimated that this was between 3.75-4.00% (note: these forecasts will be updated at the September meeting).


• 
  HOW LONG AT TERMINAL: The question of where terminal is will help traders gauge where the 'pivot' from rate hikes, to rate cuts will be. There is also the question about how long the Fed will stay at Terminal; the recent Fed meeting minutes said "some participants indicated that, once the policy rate had reached a sufficiently restrictive level, it likely would be appropriate to maintain that level for some time to ensure that inflation was firmly on a path back to 2%." Analysts note that historically, the Fed has usually stayed at Terminal for between 3-15 months, with an average of around 6.5 months; this suggests that rate cuts could be a possibility in H2 2023. Money markets currently think the Fed will raise rates to 3.50-3.75% by the end of this year, and will have cut rates at least once by the end of 2023.


• Click here for the full Newsquawk primer.

SNB's Jordan focus points/context:

• Remarks will be judged for any guidance around the September meeting and on the potential for intra-meeting action amid the elevated and above target inflation backdrop.


• Reminder, the SNB unexpectedly hiked by 50bp to -0.25% at the June gathering, the next meeting is due on September 22nd.


• Following a "National Bank in Brief" (not listed as an "economic publication") release which stated that the SNB may take policy measures at any time between regular meetings if required, there has been heightened focus on inflation prints given domestic CPI is well above target already.


• The next inflation print is due on Thursday, September 1st and follows the July reading which matched the prior and printed slightly beneath expectations, thus lessening the potential of an intra-meeting move.

ECB’s Schnabel/Villeroy

• Given her position as director of market purchases, remarks from Schnabel are always under heightened focus.


• Albeit, she spoke on 18th August (available here) remarking that a recession alone would not be enough to control inflation and that while a technical recession is a possibility, the price concerns from before July’s hike (+50bp) remain and as such the outlook is unchanged.


• Given her position, any fresh guidance/insight on TPI – particularly heading into the Italian elections on September 25th – will be sought as the ECB’s conditions around it are extensive and seemingly provide them with maximum discretion around its implementation. On purchases, recent Reuters sources outline that a September decision re. ending APP reinvestments is unlikely as talks are yet to commence with the focus firmly on interest rates.


• Elsewhere, given the recent pressure in EUR that has seen a convincing drop below parity in EUR/USD, officials may wish to talk on this and associated inflation implications. Thus far, remarks on the matter have been relatively limited and have mostly emanated from hawkish members (e.g. Kazaks) who believe a weak Euro is a problem.

26 Aug 2022 - 11:05- Fixed IncomeData- Source: Fed