Markets Wrap after the Jackson Hole

 Jerome Powell made it clear the Fed is willing to let the economy suffer as it fights inflation. Powell referenced previous attempts by the Fed to bring down inflation and said history has taught the central bank that not acting quickly on prices will likely only mean a bigger hit to the labour market in the long run. 

MOM of the Jackson Hole - Powel and his colleagues at the Fed are destined to drive the Inflaton down as much as they can, with acc. to Powel, symbolizes a "little" hurt to the economy, housing market and the rest of the world. Fed's restrictive monetary policy is expected to remain until the rest of the quarter with a slight increase in the interest rates.


 

Effects - Treasury yields rose, with the 10-year rate hovering around 3.11%. The two-year yield had climbed to its highest level since 2007 earlier in the day before paring the advance, also both S&P500  and Nasdaq fell by almost 3.9 and 3.4% respectively. The Dow dropped more than 1,000 points Friday.

History of Jackson Hole - The first day of the Jackson Hole meeting usually kick-starts strong stock market performance in the near term. The average move for the Dow for the month following the first day of the meeting is up 0.3%, in data dating back to 1978, according to Dow Data. The S&P500 averages a 0.5% gain, while the Nasdaq averages a 0.9% rise.  

What's in it for you - Hoping for an interest rate hike, we expect a downwards rally in stocks worldwide. Bloomberg reported the Asian futures looking stable after the first day which was hardly like its history.

Support Links : 

Bloomberg Market Wrap

Powells Speech

History of Jackson Hole - 1

Market reaction on Friday and Monday

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