Last week, the market oscillated narrowly amid intertwined bullish and bearish information, with investors generally adopting a cautious sentiment. On one hand, some economic data showed economic resilience, but on the other hand, concerns about corporate profitability in a high-interest-rate environment persist. Without clear guidance, global markets are focusing entirely on the upcoming "Super Thursday" and "Finale Friday" this week - the Federal Reserve will intensively release key policy signals.
From the "preview" of meeting minutes to the Fed Chair's "definitive statement", the main theme of this week's market is undoubtedly "listening to the Federal Reserve". The Jackson Hole Global Central Bank Annual Conference will provide global central bank officials an excellent platform to set the tone for monetary policy in the coming months.
Key Point One: Thursday Early Morning "Fed Time" - Meeting Minutes and Official Speeches
- Thursday 2:00 AM Beijing Time: Federal Reserve Releases Monetary Policy Meeting Minutes
- Thursday 3:00 AM Beijing Time: 2027 FOMC Voting Member, Atlanta Fed President Bostic Delivers a Speech
Before Powell's heavyweight speech on Friday, the Thursday early morning minutes will provide the market's first opportunity for an in-depth insight into the Fed's internal policy tendencies. These minutes will detail the discussions among committee members about the current economic situation, inflation trajectory, and future policy interest rate trends during the last FOMC meeting.
The market will focus on the following points:
- Degree of Internal Disagreement: Do committee members have significant differences about "when it is appropriate to adjust interest rates"? Are hawkish voices dominant, or are dovish concerns increasing?
- Economic Assessment: How does the Federal Reserve view the currently still-strong job market and sticky service sector inflation? Are they more worried about inflation's potential resurgence or economic "hard landing" risks?
- Keyword Search: The market will carefully read the minutes' wording, searching for key expressions like "sufficiently restrictive" and "patient on the outlook" to judge subtle policy shifts.
Following this, Atlanta Fed President Bostic's speech will provide fresh perspectives from decision-makers. As a future voting member, his remarks will reflect Fed officials' real-time views on economic prospects after obtaining the latest data, which can be seen as an "update and supplement" to the minutes. If his views are consistent with the minutes' tone, it will reinforce market expectations; otherwise, it might cause market confusion and short-term volatility.
Key Point Two: Friday Evening's "Finale" - Powell's Annual Conference Speech
- Friday 10:00 PM Beijing Time: Fed Chair Powell Delivers a Speech at the Jackson Hole Global Central Bank Annual Conference
This is undoubtedly the focus of global markets this week. Historically, many Fed chairs have used this occasion to signal major monetary policy shifts to the market. At this crossroads of global inflation decline but unstable foundations and uncertain economic growth prospects, every public statement by Powell could trigger market "turbulence".
Market's Three Major Speculations:
- Hawkish Stance: Reaffirming Anti-Inflation Determination. Powell might emphasize that although inflation has made progress, the "last mile" battle remains challenging, discussing rate cuts is premature, and further policy tightening might not be ruled out if necessary. If so, this would impact risk assets, with the US dollar and Treasury yields potentially rising.
- Dovish Shift: Hinting at Policy Turning Point. If Powell acknowledges more downward economic risks and shows stronger confidence in inflation's downward trend, suggesting policy rates have peaked and opening the door for future rate cuts, this would significantly boost market sentiment, potentially lifting US stocks and pressuring the US dollar.
- Neutral Balance: Emphasizing Data Dependency. This is the most likely scenario. Powell might maintain a "respond as you go" strategy, emphasizing that future decisions will depend on subsequent economic data, avoiding providing any clear forward guidance. While such a statement seems balanced, it might disappoint markets due to lack of novelty, potentially causing increased volatility.
Other Data Worth Watching
- Thursday 8:30 PM Beijing Time: US Weekly Initial Jobless Claims
As a high-frequency data reflecting labor market health, initial jobless claims are an important window to observe economic trends. If this data unexpectedly rises significantly, it would indicate the job market is cooling, potentially strengthening market expectations of a dovish Fed shift. Conversely, if data remains low, it suggests the job market remains hot, supporting the Fed's maintenance of high interest rates for a longer period. This data, published the night before Powell's speech, will provide the market with a final key reference.
This Week's Summary and Outlook
In summary, this is truly a "Federal Reserve Week". The market might maintain a wait-and-see attitude before Thursday early morning, with concentrated market volatility truly beginning on Thursday. Whether the meeting minutes, official speeches, and Powell's final positioning will transmit consistent signals is key to determining this week's and even the next month's market direction.
Investors need to prepare for potential high market volatility and closely monitor every detail of these events. Whether Powell's speech will slice through the sky like an eagle or bring an olive branch like a dove, the answer will be revealed this Friday evening.
