US stock futures were steady in premarket trading on Friday as all eyes turned to the Federal Reserve’s Jackson Hole Symposium, where Fed Chairman Kevin Warsh is scheduled to speak.
Markets are seeking clarity from Warsh on the Fed’s rate strategy after his stance at the last Fed meeting created confusion. The Fed chairman’s speech, which is scheduled to begin at 10 a.m. ET, comes as Fed officials remain divided on whether to raise interest rates and as inflation has stayed persistently above the central bank’s target.
The 10- and 30-year Treasury yields (^TNX, ^TYX) were little changed ahead of the Jackson Hole summit but aren’t far off from multiyear highs reached earlier this month as concerns about inflation and national debt exerted pressure.
Investors also continue to digest Nvidia’s (NVDA) bullish long-term outlook, which has rebuilt confidence in the artificial intelligence trade and lifted tech stocks on Thursday. Similarly, Salesforce (CRM) brushed aside worries about a “SaaSpocalypse,” sending its stock to its best day since 2020.
There are no notable earnings reports on Friday, but the University of Michigan’s survey of consumer sentiment will provide perspective on how Americans are viewing economic conditions.
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Bitcoin and Cathie Wood are partying like it’s 2021 again
Bitcoin (BTC-USD) and the Ark Innovation Fund (ARKK) are both up more than 20% in August, something that has happened only four other times since Cathie Wood launched her flagship ETF in 2014.
The pairing brings back memories.
Late 2020 and early 2021 were the age of zero interest rates, stimulus checks, SPACs, meme stocks, crypto millionaires, and seemingly every company finding a way to put “innovation” in its pitch deck. ARKK became one of the defining trades of the era.
Both bitcoin and ARKK are gaining over 20% in August. ·Yahoo Finance AlphaSpace
What’s at stake for markets ahead of Kevin Warsh’s speech
Fed Chairman Kevin Warsh’s keynote speech on Friday could be a market-moving event, but Warsh may not say what the market wants to hear.
Sevens Report Research Founder Tom Essaye noted that Warsh’s Jackson Hole speech “could create a solid pullback” in stocks if it doesn’t communicate very much on his stance on inflation or the path of interest rates.
People are already nervous about the Fed, with long-dated Treasury yields remaining elevated, Essaye continued.
“We don’t know what’s going on for the first time in well over a decade,” Essaye told Yahoo Finance on Wednesday. “And part of the elevated yields is Fed uncertainty. So I think Warsh needs to come out and give a very strong response on inflation but also signal to the market that he’s not interested in sort of starting an extended rate-hike campaign.”
“If he can do that and provide a little bit more clarity on what he’s looking at to make rate decisions, I think that the market can breathe a sigh of relief,” Essaye said.
Good morning. Here’s what’s happening today.
Economic data: MNI Chicago PMI, August (57.6 previously); U. Mich. sentiment, August final reading (51 previously); U. Mich. current conditions, August final reading (51.8 previously); U. Mich. expectations, August final reading (50.6 previously); U. Mich. 1-year inflation, August final reading (4.3% previously); U. Mich. 5-10 year inflation, August final reading (3.3% previously); Kansas City Fed services activity, August (14 previously)
Gold holds near $4,600 as investors focus on Fed rate-hike path
Bloomberg reports:
Gold steadied near $4,600 an ounce as investors weighed the outlook for US interest rates ahead of a key speech by Federal Reserve Chairman Kevin Warsh.
Bullion was little changed after adding 0.2% in the previous session but remained on track for its biggest monthly gain since 1999. The metal was given fresh impetus by the US Treasury’s surprise intervention in the bond market, which revived interest in the so-called debasement trade that helped power gold’s record-breaking rally last year.
Investors will be seeking clues to the Fed’s approach to inflation when Warsh makes his first major speech as chairman later on Friday. The much-anticipated address at the central bank’s annual Jackson Hole symposium offers Warsh an opportunity to counter criticism that he hasn’t been forthright with his views on the economy.
Economists and policymakers are divided over the need to hike rates in the coming months, which would be a headwind for non-yielding gold. Though Fed officials kept borrowing costs unchanged in July, three dissented in favor of a quarter-point hike.
