Strong job gains lead to taper ideas been push forward
Goldman Sachs has raised its expectations for the Fed announcing a taper to 25% in November versus 20% previously. 55% chance in December.
Newsquawk points out that analysts at Capital Economics has raised the possibility that chair Powell may use Jackson Hole speech from August 26 – 28th as an opportunity to hint more strongly about tapering. They initially thought that tapering wouldn't start until early next year but now think that they could be sooner than expected.
The Fed has three more meetings in 2021: September 22, November 3, and December 15. By November 3rd, the August and September jobs reports will be out (September will be released in early October from data from mid-September). They won't have the October jobs report but may have a good handle of the trends from post school openings (hopefully) and the end of the emergency $300/week payments. It seems feasible.
Focus has certainly increased for the Jackson Hole Summit and the chairs comments at that point. Powell may continue to be more cautionary then some of the other governors and Fed presidents, preferring to see the impact after the ending of the emergency benefits in September. However, he risks that inflationary pressures continue to build from wages and more employed (which are less transitory - although they will slow after the recent spike higher). The likes of Bullard, Kaplan and Waller may up their voices however especially with regard to tapering.
