On Monday, the global market was filled with a tense atmosphere of 'major events approaching': the dollar rose against the trend, gold and US bonds peaked before retreating, and US stocks stagnated near historical highs. In terms of fluctuations, the market seems to be moderately volatile, but structurally there are obvious 'leakage signals'—the pattern of 'dollar rising, everything else falling' is gradually taking shape. This seems more like investors have 'received a tip' in advance, actively adjusting their positions in preparation for the Fed's statement ahead of the Jackson Hole annual meeting.
This week's market focus will be completely centered on Fed Chairman Powell's speech at Jackson Hole on Friday, and the actions and expectations on Wall Street have already revealed judgments about the 'Fed's direction,' with two key signals being particularly important:
1. Cooling Rate Cut Expectations: The market's probability of a Fed rate cut in September has dropped from a high of 100% last week to 80%, significantly reducing the certainty of a rate cut.
2. Hawkish Signals Become Consensus: Mainstream institutional research reports almost unanimously expect Powell to release a hawkish stance.
HSBC: The current market is facing both inflationary pressures and slowing employment, showing signs of 'stagflation.' Powell will find it difficult to release dovish statements; if policies are loosened at this time, the risks will further expand.
Bank of America: Powell has every reason to choose to 'hold his ground,' maintaining a cautious attitude at the annual meeting to avoid being 'captured' by market expectations regarding policy direction.
Citibank: Its dollar position indicator has shifted from a slight short to neutral, reflecting that investors currently have no clear bullish or bearish bias towards the dollar—this presents a good opportunity for Powell, as even hawkish signals are unlikely to trigger excessive market reactions, indicating that the market is gradually accepting a more 'hawkish' Fed.
The more likely trend ahead is that the market will not wait until the day of Powell's speech to react but will digest the risks of a 'possible disappointment' (i.e., further fading rate cut expectations) beforehand. Based on Powell's past style, after maintaining a cautious policy for a long time, it is unlikely he will give a clear statement this time, but recent labor market data will influence his stance—he is more likely to use ambiguous and 'profound' expressions, leaving interpretation space for the market and avoiding directly anchoring policy direction.
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