Global markets are trading with caution midweek as focus shifts squarely to Jackson Hole, where Federal Reserve Chair Jerome Powell will deliver his closely watched address on Friday. With equity valuations stretched and Treasury yields signaling heightened conviction, traders are treating the latest pullback as profit-taking ahead of what could be a pivotal moment for monetary policy. Swaps markets see a September quarter-point cut as nearly certain, with another reduction by year-end fully priced in.
The question now is whether Powell validates that view or tempers expectations by stressing the importance of upcoming data before the September decision. Investors are also keen for signals on the broader easing trajectory into 2026. While weak payrolls earlier this month bolstered the case for cuts, the sharpest jump in wholesale prices in three years has revived concerns about tariff driven inflation a key factor that has restrained Fed officials from moving more aggressively. Traders will parse Powell’s comments for any indication of how the Fed intends to balance growth risks against lingering price pressures.
Political pressure is adding another layer of complexity. President Donald Trump renewed his criticism of Powell, accusing the Fed chair of hurting the housing market by holding off on deeper rate reductions. At the same time, Trump is pressing ahead on the geopolitical front, urging Russia’s Vladimir Putin and Ukraine’s Volodymyr Zelenskiy to show “flexibility” as he pushes for a bilateral summit to accelerate peace efforts.
With markets already leaning heavily toward rate cuts, Powell’s tone at Jackson Hole could trigger sharp repricing across Treasuries, the dollar, and risk assets. Traders should prepare for elevated volatility into Friday and position carefully, as this speech may set the tone not just for September but for the Fed’s policy path into 2026.
Disclaimer: This report is for informational purposes only. It does not constitute investment advice or represent the official views of any central bank or regulatory body.