Jackson Hole: Leave the fireworks at home? - TDS

With both ECB President Draghi and Fed Chair Yellen making remarks at the Jackson Hole Symposium today, markets will be paying close attention, according to analysts at TDS.

Key Quotes

“This year’s theme is “Fostering a Dynamic Global Economy” and a full schedule of the event will only be available at 8pm EDT on August 23. It is worth highlighting that this year’s Symposium will represent a sea change; this will be the first Symposium in a long time where remarks on tightening policy will be more closely watched than those on further easing. This may in turn encourage Draghi and Yellen to shed little new light on their projected path for policy tightening.” 

“The July FOMC minutes released suggested that while the Fed has continued to debate the low levels of inflation, “most participants thought that the framework remained valid.” This suggests that ongoing labor market tightening should continue to place upward pressure on inflation, keeping the Fed on a tightening path. Yellen may therefore continue to hint at an impending announcement of balance sheet runoff in September, but may keep mum on the projected path of future rate hikes.” 

“There has also been considerable focus on ECB policy ever since Draghi’s more hawkish remarks at Sintra. Media reports have nevertheless suggested that Draghi is unlikely to offer strong guidance on the ECB’s tightening path at Jackson Hole. We believe that the ECB will announce a tapering of QE in October, leading bunds to underperform Treasuries and tightening the particularly wide 10yr Treasury-bund spread further.”