Tonight's Federal Reserve meeting (Jackson Hole Symposium) is the focus of market attention, and Powell's speech will have a key impact on short-term and medium-term market expectations. Based on the latest information, we will analyze from several core dimensions:

1. Background of the meeting and policy expectations

  1. Market consensus on interest rate decisions
    Market expectations for a rate cut in September have risen to99.9%, but the minutes from the July meeting show that there are divisions within the Federal Reserve — two board members (Waller, Bowman) support a 25 basis point rate cut, while the majority believe that inflation risks still outweigh employment concerns. This division may lead Powell to maintain adata-dependentand ambiguous stance in his speech, emphasizing the need to wait for the August employment and CPI data (to be released before the September meeting).

  2. Contradictory signals from economic data

    • Weak job market: July non-farm payrolls added only 73,000 jobs (expected 110,000), the unemployment rate rose to 4.2%, and the data for May-June was revised down by 258,000, indicating a cooling trend in the labor market.

    • Inflationary pressures persist: July CPI year-on-year at 2.8%, core CPI at 2.9%, but tariffs may push prices up through the supply chain, triggering long-term inflation concerns.
      This pattern of 'weak employment, sticky inflation' puts the Federal Reserve in a policy dilemma, and Powell may emphasize the complexity of balancing thedual mandate.Complexity.

2. Key points of Powell's speech

  1. Adjustments to the monetary policy framework
    This meeting focuses on 'Labor Market Transformation', and Powell may discuss the Fed's rebalancing of employment and inflation targets. The market expects he may abandon theFlexible Average Inflation Target (FAIT), adopting a more neutral policy framework to address changes in the economic structure post-pandemic. If this signal is clear, it may weaken market bets on aggressive rate cuts.

  2. Qualitative impact of tariffs
    The tariffs imposed by the Trump administration have already had actual impacts on U.S. imports, manufacturing, and consumer prices. Powell may acknowledge theshort-term inflation effects, but downplay their long-term impact, emphasizing the need for time to observe their transmission on prices and growth. If his wording leans towards 'one-time shock', it may alleviate market concerns about stagflation; if it suggests 'persistent pressure', it may reinforce hawkish expectations.

  3. Guidance on the rate cut path
    Although the market generally expects a 25 basis point rate cut in September, Powell may guide expectations in the following ways:

    • Emphasize caution: Point out that inflation has not stabilized at target, and rate cuts depend on subsequent data (e.g., August CPI, non-farm payrolls).

    • Limitations on frequency: Suggest that the number of rate cuts for the year may be fewer than the market's expectation of 3 times, with the terminal rate potentially above 3.5%.
      If he signals that 'rate cuts do not open a period of easing, but are instead for risk hedging', it may lead to a rebound in U.S. bond yields and a short-term strengthening of the dollar.

3. Potential impact on financial markets

  1. U.S. stocks and cryptocurrency

    • U.S. stock volatility increases: If Powell's wording is hawkish (e.g., downplaying the urgency of rate cuts), it may trigger a sell-off in tech stocks (e.g., the Nasdaq has declined for four consecutive days); if dovish, it may push the S&P 500 above 6400 points.

    • Cryptocurrency divergence: Bitcoin (BTC) is sensitive to interest rates; if rate cut expectations rise, it may break above $117,000; but if Powell signals 'higher for longer', it may test the support at $108,000. Ethereum (ETH) may perform relatively well due to RWA tokenization and ETF inflows (net inflow for 14 consecutive weeks).

  2. Dollar and U.S. bonds

    • Dollar Index: If Powell maintains policy flexibility, the dollar may fluctuate in the 98-99 range; if unexpectedly hawkish, it may test the 100 mark.

    • U.S. bond yields: The 10-year U.S. Treasury yield may fluctuate in the 4.2%-4.5% range, if rate cut expectations cool, it may rise to 4.8%.

  3. Stablecoins and capital flows
    Rumors of discussions between the U.S. Treasury and stablecoin issuers about purchasing short-term U.S. Treasuries may introduce long-term liquidity into the crypto market. If Powell mentions support for stablecoin regulation, it may boost market confidence in mainstream stablecoins like USDT and USDC.

4. Historical experience and risk warnings

  1. Policy signals from Jackson Hole
    Powell's past statements at this meeting often become market turning points: the new framework launched in 2020 triggered a bull market in U.S. stocks, while the 'pain argument' in 2022 led to a collapse in cryptocurrencies. This will be his last speech at Jackson Hole during his term, and his wording may carry more symbolic significance; we need to be alert to unexpected statements.

  2. geopolitical and policy uncertainties
    Tariff policies of the Trump administration and personnel changes at the Federal Reserve (e.g., Waller may take over as chair) could amplify market volatility. Additionally, after the speech in the early hours of August 23, attention should be paid to the immediate reactions of U.S. stocks after hours and Asian markets, especially the capital flows of tech stocks and cryptocurrencies.

5. Operational Recommendations

  1. Short-term traders

    • U.S. stocks: If Powell is hawkish, consider shorting Nasdaq ETFs (e.g., SQQQ); if dovish, consider going long on S&P 500 futures.

    • Cryptocurrency: BTC can be traded in the range of $112,000 - $117,000 for high selling and low buying, while ETH should focus on the $4,300 support; if broken, it can be followed up.

    • Hedging tools: Buy VIX call options or gold ETFs (e.g., 518880) to hedge against tail risks.

  2. Medium to long-term investors

    • U.S. stocks: Focus on anti-cyclical sectors like AI semiconductors (e.g., NVIDIA) and consumer blue chips (e.g., Apple), while avoiding overvalued growth stocks.

    • Cryptocurrency: Accumulate tokens related to ETF expectations like ETH and SOL on dips, while allocating gold as an inflation hedge.

    • Forex: If the dollar strengthens, consider going long on Euro/USD (EUR/USD) or yen arbitrage trades.

Summary

Tonight's meeting will be a key watershed for the Federal Reserve's policy path. Powell's speech may seek a balance between 'dovish expectations' and 'hawkish realities', and subtle changes in his wording may trigger significant fluctuations in global asset prices. Investors need to closely monitor his statements regarding inflation, tariffs, and interest rate cuts, adjust positions flexibly, and be wary of the tail risks brought by geopolitical and policy uncertainties.