Last week, global markets presented a narrow oscillating pattern amid intertwined bullish and bearish factors, with investors significantly reducing risk appetite. Although some economic data demonstrated resilience, the suppressive effect of high-interest rates on corporate profit prospects still left the market concerned. Against a backdrop of ambiguous policy signals, global capital has fully focused on the upcoming "Super Thursday" and "Finale Friday" this week - the Federal Reserve will release intensive policy signals to indicate the short-term monetary policy path for the market.
From the "preview" of monetary policy meeting minutes to the Fed Chairman's "ultimate tone-setting", the market's operating logic this week will undoubtedly revolve around "Federal Reserve policy interpretation". The Jackson Hole Global Central Bank Annual Conference provides a key platform for central bank officials to set the tone for monetary policy direction in the coming months.
Highlight One: Thursday Morning "Federal Reserve Time"
Thursday morning at 2:00 AM Beijing time: Federal Reserve releases the latest monetary policy meeting minutes
Thursday morning at 3:00 AM Beijing time: 2027 FOMC voting member, Atlanta Fed President Bostic to deliver a speech
Before Powell's heavyweight speech on Friday, the meeting minutes released Thursday morning will be the first key window for the market to probe the Fed's internal policy tendencies. The minutes will systematically disclose the discussion details from the last FOMC meeting, including committee members' assessments of the current economic situation, inflation evolution path, and future policy interest rate adjustment rhythm.
The market will focus on capturing three core messages:
Policy divergence degree: Do committee members have significant differences in perception of "interest rate adjustment timing"? What is the power balance between hawkish tightening stance and dovish easing demands?
Economic assessment framework: How does the Fed define the interactive impact of the current strong job market and service sector inflation stickiness? Is the policy focus on preventing the risk of secondary inflation rebound or warning against economic hard landing pressure?
Policy wording evolution: The market will meticulously study key expressions in the minutes, such as the usage context of terms like "sufficiently restrictive" and "patient on the outlook" to determine the marginal adjustment direction of monetary policy.
The subsequent speech by Atlanta Fed President Bostic will provide real-time policy perspectives of decision-makers based on the latest data. As a future voting member, his stance can be seen as a "dynamic update and supplement" to the meeting minutes. If his position is consistent with the minutes' tone, it will reinforce market expectation stability; if a deviation occurs, it might trigger short-term pricing disruption and volatility increase.
Highlight Two: Friday Night "Finale"
At 10:00 PM Beijing time on Friday, Fed Chairman Powell will deliver a keynote speech at the Jackson Hole Global Central Bank Annual Conference, which is undoubtedly the "final hammer" for global markets this week. Historical experience shows that many Fed chairs have used this platform to signal major monetary policy shifts. At a critical point where global inflation decline is not yet stable and economic growth prospects remain unclear, every nuance of Powell's statement could trigger significant market fluctuations.
The market has three expected scenarios for his speech:
Hawkish Continuation: Reinforcing the anti-inflation theme. Powell might emphasize the difficulty of inflation governance's "last mile", clearly stating that discussing rate cuts is premature, and not ruling out further policy tightening if necessary. Such statements will suppress risk assets and drive the US dollar index and US bond yields higher.
Dovish Shift: Releasing policy turning point signals. If Powell focuses more on economic downside risks, expresses clear confidence in inflation's downward trend, and hints that policy rates have peaked with room for future rate cuts, it will significantly boost market risk appetite, driving US stock rebounds and pressuring the US dollar.
Neutral Balance: Adhering to data-dependent principles. This is the highest probability scenario - Powell might continue the "situational choice" strategy, emphasizing that future policy adjustments will strictly depend on dynamic economic data changes, avoiding providing clear forward-looking guidance. While such statements offer stability, they might trigger market disappointment due to lack of incremental information, intensifying short-term volatility.
Other Key Data Outlook
US weekly initial jobless claims will be announced at 8:30 PM Beijing time on Thursday. As a high-frequency indicator reflecting labor market prosperity, this data is an important leading indicator for observing economic cycle turning points. If the data unexpectedly rises significantly, it suggests job market cooling, potentially strengthening market expectations of a Fed dovish turn; if it remains low, it indicates employment resilience, supporting an extended high-interest rate policy. This data, released the night before Powell's speech, will provide the final critical reference for market expectation adjustments.
This Week's Market Outlook
In summary, this week is truly a "Federal Reserve Policy Week". The market will likely maintain a wait-and-see attitude before Thursday morning, with volatility concentrated from Thursday onwards. The consistency of signals from meeting minutes, official speeches, and Powell's final stance will be the core variable determining this week's and even the next month's market trends.
Investors need to be prepared for high volatility and closely track subtle changes in policy statements. Whether Powell's speech will be a "long bearish sword" continuing hawkish tightening or an "policy olive branch" signaling a dovish turn will be definitively revealed Friday night.
