MacroEdge 8/22 Midweek Report: Jackson Hole, Real Estate Data Update, BLS Revisions, and More
In this latest midweek report - we dive into expectations of Powell's Jackson Hole presser tomorrow, the latest on the BLS revisions, volatility, homebuilders, and more. #MacroEdge
Good Wednesday evening all,
This week has gone by very quickly but I am no longer on the road which has been nice to take a break from. The most important comments of the week are coming out of Jackson Hole from Fed officials and we are seeing an overall dovish tone in how the Fed continues to speak - particularly on employment. While the tone was not alarm, we have seen them explicitly bring up the option now for a 50bp cut next month, which we think largely hinges on whether or not the August employment data comes in as weak as the July data. In the report this evening we’ll go over some of the crucial data from this week and movement on the market front - where we are seeing volatility pick up a bit after another ruthless 8-day rally to the upside that caught some off-guard.
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Diving into the data from the week and things we are looking out for - Powell will deliver a speech tomorrow from the annual Jackson Hole symposium. This speech will set the tone for an easing cycle starting next month - although we don’t anticipate Powell using overly concerned verbiage around the labor market as the Fed continues its ‘summer of policy errors’ - as we defined it - pathway of holding too high for too long. We do expect that Powell will open the door to flexibility on the 50bp cut, especially if the August labor market report comes in as weak, or weaker, then what we saw in July. The large payroll revision is also something we are factoring into this equation as well.
