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Fed Chair's Jackson Hole Speech Fuels Market Volatility
21 Aug
Summary
- Solid factory data casts doubt on Fed's readiness to cut rates
- Traders less certain about September rate cut after weak jobs data
- Record inflows into U.S. assets contradict expectations of rate cuts
On August 21, 2025, U.S. stocks declined, and the dollar and Treasury yields rose, as strong factory data cast uncertainty over the Federal Reserve's readiness to lower interest rates in the near future. Investors are now eagerly awaiting Fed Chair Jerome Powell's highly anticipated speech at the Jackson Hole symposium on August 25, 2025, which could provide crucial insights into the central bank's policy direction.
The article also delves into an apparent contradiction in the markets, noting the record inflows of foreign capital into U.S. assets, which seems at odds with the 125 basis points of rate cuts that traders are currently expecting by the end of 2026. This discrepancy suggests that the markets may be grappling with mixed signals about the strength of the U.S. economy and the Fed's policy stance.
The report further highlights several other key market developments, including a third consecutive record high for Britain's FTSE 100 index, a surge in Chinese stocks to a 10-year peak, and significant moves in the currency and bond markets, such as the Japanese yields hitting historic highs.
