Friday 26th August 2022

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There’s unlikely to be any surprises when Jerome Powell steps up to the podium at the Jackson Hole Symposium tonight (Australian time). It’s well signalled that he will be uber-hawkish, and with the Fed’s credibility on the line, best not to go too-soft when inflation is spiking. That said, NAB’s Taylor Nugent says there has been some pull back in bond yields ahead of the main act, whilst equities have pushed higher overnight. Minutes from the ECB have largely been overtaken by events. It was noted that a “recession would not necessarily diminish upside inflation risks, especially if it was related to a gas cut-off”, but the question remains, what can monetary policy do about it? And US GDP has been revised up, still in negative territory but gross domestic income perhaps provides a more realistic – and positive – picture of the health of the US economy.