Market Perspectives
Two weeks ago the Treasury was buying back its own long bonds to hold yields down. This week the Fed chair stood up at Jackson Hole and said the central bank's predominant focus right now should be prices, that the economy looks stronger than expected, and that inflation is concerning. The odds of a September rate rise went from 35% to 57% in a single afternoon. Equities still finished higher: the S&P 500 rose 0.49% to 7,711.76, the Nasdaq 0.85% and Europe's Stoxx 600 0.33% to 655.16, helped by a 106% revenue quarter from Nvidia that added roughly $440bn of market value in a session. What broke was gold, down 3.18% on Friday alone to $4,454.08, because the debasement trade needed a Fed that would stop tightening and just heard the opposite.
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BONDS & MACROECONOMICS
Fed Chair Warsh told Jackson Hole that inflation is running above the 2% target and that the Fed's predominant focus right now should be on prices. Odds of a September increase jumped to 57% from 35% the day before, the 10-year rose four basis points to 4.72% and the 30-year sat at 5.21%. July core PCE had come in at 3.3% year on year, hotter than expected, with the headline at 3.7% and also above forecast.
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