Crypto, stocks edge higher as Jackson Hole inches closer

by Arthur · August 24, 2022

Markets have found a reprieve from their recent falls ahead of Jerome Powell’s speech on Friday
The market is spilled on what the outcome of September’s Federal Open Market Committee may be

The latest decline in the markets saw some relief on Wednesday, as both stock and crypto traders speculate about what central bankers might get away with after this week’s Jackson Hole symposium.

Stocks managed to stay in the green during Wednesday’s trading, with the S&P 500 ticking a whopping 0.8% higher and the Nasdaq rising 1%. After three days of decline, it was a welcome, if minor, reprieve.

Leading crypto assets bitcoin and ether also moved higher, rising 1.2% and 0.8%, respectively, as of

“We are at an inflection point for mega-cap trading as hedge funds position themselves for further weakness in bonds and a much weaker consumer as the economy slows,” said Edward Moya, senior market analyst at Oanda.

“Today’s pullback is small and on low volume, meaning most traders are playing the waiting game until Fed Chair Powell’s Jackson Hole Symposium speech.”

The Economic Policy Symposium, hosted by the Kansas City Federal Reserve, starts Thursday. Powell will speak on Friday, and the markets could be caught off guard, say analysts.

“Fed Funds Futures and Treasuries says [Powell’s] The Jackson Hole speech will be hawkish, with a commitment to more rate hikes and no discernible hint of a “pivot” in the first half of 2023, said Nicholas Colas, co-founder of DataTrek Research.

“With the VIX at 24, US stocks may not yet have fully embraced this opportunity.”

Futures markets show a 58.5% chance of a 75 basis point rate hike at the next policy meeting in September, according to CME Group data. There is a 41.5% chance of a 50 basis point increase.

Although markets are fairly evenly split between 50 and 75 basis points, economists do not expect rising interest rates to stop in September.

Dan Morehead, managing director and chief investment officer at Pantera Capital, sees Fed Funds rates reaching at least 4% or 5% before the central bank changes strategy.

“You cannot tame ongoing inflation with Fed Funds 600 basis points lower than inflation,” Morehead wrote in a note Wednesday. “The Fed will be forced to tighten much more than markets currently estimate.”

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Casey Wagner

Blockwork

Senior reporter

Casey Wagner is a New York-based business journalist who covers regulation, legislation, digital asset investment firms, market structure, central banks and governments, and CBDC. Before joining Blockworks, she reported on markets at Bloomberg News. She graduated from the University of Virginia with a degree in media studies. Contact Casey by email at [email protected]