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Fed Chair Powell's annual Jackson Hole remarks have become must-watch events for traders, often sparking significant market moves. Goldman Sachs is out with a quick rundown of the past 6 years and how it affected the front end of the bond market (the dollar generally follows front-end yields).
Key takeaways:
- Powell's tone has swung from dovish to hawkish and back again
- Market reactions vary, but 2-4bp moves are common
- Recent years have seen more hawkish surprises
Markets are priced for something dovish on Friday at 10 am ET. Fed funds futures are pricing in a 71% chance of 25 bps in September and a 29% chance of 50 bps. In the remaining 3 meetings this year, the marekt is pricing in 97 bps in easing along with 195 bps in the year ahead.
It's a good recap and a reminder that last year's speech was a strong hint that the rate-hiking cycle was over.
h/t @MikeZaccardi