The Federal Reserve’s annual Jackson Hole economic symposium is the big event of the upcoming week, and it could result in some volatile trading.
Fed Chairman Jerome Powell speaks there Friday and is likely to reinforce that the central bank is committed to doing what it takes to fight inflation. That could mean keeping interest rates higher for longer.
This contrasts with some investors' view that the central bank will raise rates and then start cutting them again in the second half of next year. “It’s better for rates for the Fed to show tough love and demonstrate its vigilance on inflation than to let up,” says Pimco’s Tony Crescenzi.
If the central bank were to engage in a “stop and go” policy, rates would be higher simply because investors would think the Fed slowed policy too early to crush inflation, he said.
The S&P 500 was lower in the past week after four weeks of gains. The market is hesitant ahead of Jackson Hole and chart strategists say it may be setting up for a period of choppiness.
There are some economic reports in the coming week, the most important of which will be personal consumption expenditures data Friday. This report also includes the Fed’s preferred inflation measure, the PCE deflator.
Retailers continue to report quarterly results, and Macy’s, Gap, and Nordstrom are among those on the calendar.
