The initial profit-taking on Wall Street quickly rebounded overnight, driven by the standout performance of Nvidia, which spurred selling activity in the market as participants reduced risk ahead of tonight's special speech by Federal Reserve Chairman Jerome Powell at Jackson Hole.
There is no doubt that the Fed's policy trajectory will be a primary driver for the markets going forward, with the latest updates on inflation rates and the U.S. labor market following the last FOMC meeting. The focus will be on the factors Chairman Powell emphasizes. While the prospect of an interest rate hike in the United States may be viewed as somewhat diminished, it is underscored that downside risks are accelerating, and the need for higher interest rates over a longer period may be a message that gains prominence. Exchange rates are likely to be a closely watched metric.
For now, expectations of a rate hike in September remain uncertain, but the probability of a rate increase in November has risen to 41%, up from 32% last month. Yields on benchmark government bonds retreated somewhat after the midweek selloff, while the U.S. dollar rallied to a two-month high as some position unwinding is underway.
There is no doubt that the Fed's policy trajectory will be a primary driver for the markets going forward, with the latest updates on inflation rates and the U.S. labor market following the last FOMC meeting. The focus will be on the factors Chairman Powell emphasizes. While the prospect of an interest rate hike in the United States may be viewed as somewhat diminished, it is underscored that downside risks are accelerating, and the need for higher interest rates over a longer period may be a message that gains prominence. Exchange rates are likely to be a closely watched metric.
For now, expectations of a rate hike in September remain uncertain, but the probability of a rate increase in November has risen to 41%, up from 32% last month. Yields on benchmark government bonds retreated somewhat after the midweek selloff, while the U.S. dollar rallied to a two-month high as some position unwinding is underway.
