August 23, 2024
United States:
Jackson Hole History Points to Powell Sidestepping Market Shocks
If Treasury and US stock markets are betting on one thing from Jerome Powell at the Jackson Hole symposium Friday, it’s this: He’ll play it safe.
It’s a critical moment for the Federal Reserve chair as he tries to navigate through a month that saw a gauge of equity volatility briefly spike to a generational high and bond traders going all in on bets that the US central bank is on the cusp of slashing interest rates.
Europe:
ECB’s Vujcic Sees Gradual Interest-Rate Cuts But Urges Caution
The European Central Bank probably has room to slowly lower interest rates as inflation converges toward 2%, but risks remain and officials must proceed carefully, according to Governing Council member Boris Vujcic.
“As long as data fall in line with our projections which foresee inflation to fall to 2% in 2025, that increases our confidence that we can gradually ease the restrictiveness of our monetary policy,” the Croatian central-bank chief said in an interview. “But we should remain cautious and move very gradually.”
Asia:
China Bond Trading Collapses Amid PBOC Crackdown on Record Rally
China’s attempts to cool a record bond rally have stalled a drop in yields, but at the cost of a collapse in trading activity to an extent that may create more headaches for policymakers.
Trading in the most active 10-year government bond has steadily decreased over the last two weeks, with the average daily volume on Wednesday and Thursday some 90% below the average of August 7th and 8th, according to data from the official trading system CFETS. The volume slump comes as Beijing ramps up measures to crack down on speculation in longer-dated bonds, including a warning this week against “illegal” trading.
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