Cryptos, Equities Slide as Traders Unpack Powell’s Jackson Hole Remarks

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  • Mar­kets erased gains ear­ly in the trad­ing day Fri­day fol­low­ing hawk­ish remarks from Fed Chair Pow­ell in Jack­son Hole
  • Ana­lysts were unsure how to inter­pret the speech, pre­dict­ing a slight­ly low­er chance of a 75 basis point rate hike in September

Fed­er­al Reserve Chair­man Jerome Pow­ell took a more hawk­ish stance Fri­day morn­ing dur­ing his Jack­son Hole remarks, send­ing equi­ties slid­ing. Cryp­to mar­kets were mixed as traders con­tin­ue to spec­u­late what will hap­pen at the next Fed pol­i­cy meet­ing in September. 

While recent data, such as plung­ing unem­ploy­ment num­bers and the lat­est Con­sumer Price Index (CPI) report, may sug­gest that infla­tion is cool­ing, the cen­tral bank head warned that there is still a long way to go before sus­tained price sta­bil­i­ty is reached. 

“Esti­mates of longer-run neu­tral are not a place to pause or stop,” Pow­ell said dur­ing his speech on the sec­ond day of the Eco­nom­ic Pol­i­cy Sym­po­sium, host­ed by the Kansas City Fed­er­al Reserve.

“Our deci­sion at that Sep­tem­ber meet­ing will depend on the total­i­ty of the incom­ing data and the evolv­ing out­look,” he said. 

Powell’s speech slight­ly swayed futures mar­kets, which pre­dict­ed a 54.5% chance of a 75 basis point rate hike in Sep­tem­ber imme­di­ate­ly fol­low­ing the remarks, accord­ing to data from CME Group. In the days pre­ced­ing the Jack­son Hole meet­ing, the prob­a­bil­i­ty of a third con­sec­u­tive 75 basis point increase sat at 58.5%. 

The S&P 500 slipped fol­low­ing the speech, los­ing 1%. The tech-heavy Nas­daq also lost, trad­ing 1% low­er at time of pub­li­ca­tion. Bit­coin and ether declined as well, los­ing 0.4% and 1%, respectively.

“Fed Chair­man Powell’s com­ments sent an ini­tial chill through the mar­kets, with them sell­ing off on the insis­tence that the cen­tral bank will keep hik­ing rates until he feels infla­tion is under con­trol,” Josh Olszewicz, head of research at dig­i­tal asset fund man­ag­er Valkyrie Invest­ments, said.

“Powell’s admis­sion that there will be pain before there is relief is rather hawk­ish, but both equi­ties and cryp­to assets showed sur­pris­ing resilience by rebound­ing rather quick­ly, which can be inter­pret­ed as evi­dence that the next rate hike is like­ly already priced in,” Olszewicz said.

Even as futures mar­kets remained mixed, Olszewicz is bet­ting mar­kets will take a hawk­ish inter­pre­ta­tion of Powell’s remarks. He pre­dicts anoth­er 75 basis point rate hike in late Sep­tem­ber, which he expects mar­kets will large­ly have already priced in. 

“[I] do not expect there to be a dras­tic effect on the mar­kets should that come to pass, fol­lowed by suc­ces­sive rate hikes until infla­tion is reigned in and the unem­ploy­ment rate returns to a health­i­er num­ber,” Olszewicz said.


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  • Casey Wag­n­er

    Block­works

    Senior Reporter

    Casey Wag­n­er is a New York-based busi­ness jour­nal­ist cov­er­ing reg­u­la­tion, leg­is­la­tion, dig­i­tal asset invest­ment firms, mar­ket struc­ture, cen­tral banks and gov­ern­ments, and CBD­Cs. Pri­or to join­ing Block­works, she report­ed on mar­kets at Bloomberg News. She grad­u­at­ed from the Uni­ver­si­ty of Vir­ginia with a degree in Media Studies.

    Con­tact Casey via email at [email pro­tect­ed]

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