Thursday, 24 August 2017

Why the Jackson Hole symposium deserves our attention?

Posted by Valentine at 12:42 Labels:

Yeap. I know what you are thinking... A batch of central bankers in grey suits meeting at Jackson Hole, Wyoming, for bla-bla over some boring issues no one really cares about. So why should I care about this meeting? And why is everybody talking about it?

Reasonable questions indeed. But let’s start from the fact that central bankers are not really boring since their words can move your assets up or down. From that perspective, there are no further arguments needed. You shouldn’t care, you must care. That simple really.

The Jackson Hole symposium is an annual event sponsored by the Federal Reserve Bank of Kansas City since 1978. It gathers key central bankers, finance ministers, relevant market players and the idea is to discuss an specific topic concerning the economy.

In the 2017 edition, the subject is  "Fostering a Dynamic Global Economy". The event will take place between August 24 and August 26. For official releases on the event: kansascityfed.org

Two big speeches

While there will be a large number of people speaking at the symposium, you (and basically everybody else in the market) should focus on just two speeches.

1 - Federal Reserve Chairwoman Janet Yellen - August 25 - 14:00 GMT

Janet Yellen is expected to provide some guidance over the future of monetary policy in the United States, including plans to unwind Fed’s massive $4.5 trillion balance sheet and raising interest rates for a third time later this year.

Market analysts said it is not likely to see a deviation of Yellen’s rhetoric from the last monetary policy meeting. The regulator insists that a third rate hike is still on track, but it will of course depend on inflation and labor market performance over the next couple of months.

According to Fed funds tracked by CME Group’s FedWatch tool, investors are pricing in more than a 40 percent probability of a 25 basis points rate move by December.

2 - European Central Bank President Mario Draghi - August 25 - 19:00 GMT

Mario Draghi is the hero of a totally different story. In this case, traders will pay attention to any signal of monetary policy tightening in the euro zone. Recently, Draghi recognized improvements in the economy and warned about possible adjustments in the near future.

However, analysts believe no movements in this line are expected before Germany’s September elections, which play an important role for political and economic stability in the region.

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