Powell set for final Jackson Hole speech as policy, politics raise questions that will outlast his tenure

Central Bank

Economic

Summary:

Powell’s final Jackson Hole speech may hint at September cuts, but focus is on dropping average inflation targeting, defending Fed independence, and shaping a lasting policy framework.

When Federal Reserve Chair Jerome Powell gives his last speech in Jackson Hole, Wyo., investors will be listening for whether he signals an interest rate cut is coming next month.

But Powell's outline of two bigger questions facing the Fed will shape the future of the central bank in ways that will outlast his tenure and mark a key part of his legacy as chair.

Powell's widely anticipated speech on Friday morning will be delivered as the debate over the state of the economy, and the possibility of rate cuts, heats up.

In interviews with Yahoo Finance on Thursday, Kansas City Fed president Jeffrey Schmid and Cleveland Fed president Beth Hammack both offered some caution on the need for interest rate cuts as soon as next month, given recent inflation data.

"There's a lot of data we're going to get between now and September, and I walk into every meeting with an open mind about what the right thing to do is," Hammack said. "But with the data I have right now, and with the information I have, if the meeting was tomorrow, I would not see a case for reducing interest rates."

Schmid and Hammack's colleagues at the Federal Reserve Board, Michelle Bowman and Chris Waller, have been among those more vocal about the need for rate cuts. Investors were assigning roughly 69% odds on a 0.25% cut from the Fed on Sept. 17 as of early Friday.

Disagreement over the Fed's next move, however, is only a small part of the backdrop against which Powell is set to speak.

Most notable is pressure from President Trump, who this week called for Federal Reserve governor Lisa Cook to resign amid a controversy over two mortgage loans. The Financial Times reported Thursday that the Department of Justice sent Powell a letter calling on the Fed chair to remove Cook from her post.

Trump, who refers to Powell as "Too Late" for not cutting rates earlier this year, has regularly commented on Fed policy and said interest rates should be much lower than the current benchmark range of 4.25%-4.50%. Treasury Secretary Scott Bessent has also weighed in on monetary policy, saying in an interview earlier this month the Fed ought to consider cutting rates by 0.50% in September.

"I think that having an independent central bank has been an institutional arrangement that has served the public well," Powell said last month. "And as long as it serves the public well, it should continue and be respected."

Powell is also expected to lay out changes to the central bank’s policy framework review, which articulates the Fed’s strategy and commitment to fulfilling its congressional mandate for stable prices and maximum employment.

In particular, the central bank is expected to drop so-called average inflation targeting, a policy put in place pre-pandemic when inflation was running low and Fed officials wanted to avoid deflation.

This strategy has said that if inflation ran below 2% in years past, the Fed would tolerate it running above 2% in the future on the theory that it averages out. Given the recent bout of inflation and the risks it poses to the economy, the Fed is expected to drop that and focus on an inflation target of simply 2%.

Powell signaled the change in a speech in May.

“In our discussions so far, participants have indicated that they thought it would be appropriate to reconsider the language around shortfalls,” Powell said. “And at our meeting last week, we had a similar take on average inflation targeting.”

The Fed first created its monetary policy framework in 2012, which it adjusts every five years. And just as the changes announced back in 2020 had implications for monetary policy actions over the past five years — the Fed's language shift, it could be argued, kept the lid on rate hikes even as inflation accelerated in 2021 — so too could the changes Powell announces Friday send ripples for years to come.

“While the adoption of the new framework in 2020 was not the primary factor behind the Fed’s delay and the substantial inflation overshoot, it contributed to this outcome,” said Matt Luzzetti, chief US economist for Deutsche Bank

As a result, Luzzetti expects Powell’s speech to restore a more preemptive strategy for monetary policy, along with recognizing risks of supply shocks and a return to a balanced view of inflation and the job market.

James Fishback, CEO of hedge fund Azoria, argued Powell needs to acknowledge what he calls the “tragic mistake” of average inflation targeting.

Powell noted in his May speech that inflation could be more volatile going forward than in the 2010s and that the US may be entering a period of more frequent, and potentially more persistent, supply shocks.

"The economic environment has changed significantly since 2020, and our review will reflect our assessment of those changes,” Powell said in a speech in May.

Powell also stressed enhancing the Fed’s formal policy communications, particularly regarding the role of forecasts and uncertainty. Investors will watch for whether the Fed rolls out changes to its quarterly Summary of Economic Projections, which contains the famous "dot plot," a compilation of each member of the FOMC’s expectations for interest rates that year.

Source: finance.yahoo

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Samantha Luan

Economic

Forex

Political

Commodity

China–U.S. Trade War

For American farmers travelling through the Heartland scouting corn and soybean fields, it feels like 2019 all over again.President Donald Trump is back in power, a trade war with top soybean buyer China is raging, and growers are coping with prices that are near the lowest levels in years. Huge crops ahead are only going to make matters worse.It’s a familiar picture for the more than 40 growers, analysts and journalists taking part in the annual Pro Farmer Crop Tour that started on Monday and will cross seven states before ending in Minnesota on Thursday. In 2019, they were facing exactly the same conditions.

Back then, tensions were so high that a staffer from the US Department of Agriculture (USDA) was threatened, forcing the agency to pull their people out of the tour as a precaution. Things are much calmer this year, but anxiety is slowly building up — after all, the US has yet to sell a single cargo of soybeans to China from the harvest that starts next month.“I just wish they’d start buying again,” said Bill Timblin, a Nebraska farmer on the tour. He hopes the Chinese market isn’t gone for good.

American farmers, a key voting bloc for Trump, are growing increasingly worried as harvest approaches. In a letter to the president this week, Caleb Ragland, who heads the American Soybean Association, warned growers are near a “trade and financial precipice” and cannot survive a prolonged trade war with China.“Soybean farmers are under extreme financial stress,” he said, urging the administration to reach a deal with China to remove duties. “Prices continue to drop and at the same time our farmers are paying significantly more for inputs and equipment.”

A gauge of grain prices tracked by Bloomberg fell earlier this month to the lowest since the pandemic in 2020.The USDA is already forecasting a record corn crop for the season starting in September. While the soy harvest will be smaller than last year as farmers planted less, yields are on track to hit a record.Partial results from the crop tour indicate bigger corn crops than last year in all states but Illinois. Indiana is currently the only state where soybean counts were lower than in 2024. Scouts crossed Ohio, South Dakota, Indiana, Nebraska, Illinois, Iowa and Minnesota. The combined result is expected on Friday.

In typical years, China buys on average 14% of its estimated soybean purchases before the US begins gathering its crop on Sept 1, according to an analysis by the American Soybean Association provided to the administration. The impact is being felt from Chicago to the Pacific Northwest, which is home to several export elevators dedicated to shipping American crops to Asia.

Steve Swanhorst, a South Dakota farmer on the tour, said he isn’t surprised. Trump was transparent about his plans on a variety of issues including tariffs and immigration, he said in an interview.“We had to know it was going to get rough,” he said. “You’ve got to give Trump some credit because he isn’t scared to get out of the box.”Chip Flory, who has taken part in all but one tour since 1988 and is now one of the hosts, is still positive.

“China has the need for soybeans,” he said. “There is going to come a time when they have to book beans.”Thousands of miles away from the crop tour, in Washington DC, the head of the US Soybean Export Council (USSEC) echoed that idea.“We are optimistic that some sort of a trade deal will be made soon,” Jim Sutter, USSEC’s chief executive officer, said in an interview at an event hosted by the group. “We don’t know exactly how soon.”

Luke Lindberg, the USDA’s undersecretary for trade and foreign agricultural affairs, said the government has created “very real” opportunities to get American products into new markets and that sales to destinations other than China are growing as a result.“The combines are firing up, and we need to get that soy crop sold around the world, we’re very aware of that,” he said at the USSEC event. “There are deals on the horizon that will make a significant impact for the American farmer.”

Still, concerns about China’s absence from the market at a time when growers are expected to harvest big crops are generating anxiety beyond the crop tour.

At the Iowa State Fair last week, Aaron Lehman, president of the centrist Iowa Farmers Union, said trade is top of mind after the US lost foreign markets during Trump’s first trade war with China. The Asian nation turned to South America for supplies instead.“Last time we went through this we lost lots of customers overseas and they have not come back to us,” said Lehman, who grows corn, soybeans and hay in Polk County. “We know there are things we need to do to get to fair trade for farmers, but we are not getting any closer to that with this approach.”

Source: Theedgemarkets

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Adam

Commodity

Over the last week the CME’s own FedWatch tool has quietly eroded away conviction for a September interest rate reduction. A week ago, the tool that utilizes positions made by futures traders to form a surprisingly accurate prediction of odds for what interest rates will be at any given month for up to 16 months into the future.

Jerome Powell’s Final Jackson Hole speech as acting chairman of one of the most important organizations to America’s economic future and to some extent, the global economy. Meanwhile the odds of a September rate cut have shrunken to 75% from an almost certainty one week ago. This lack of optimism for monetary easing has been gold’s strongest headwind. While it is highly unlikely that a rate cut will be “announced” at the annual meeting put on by the Kansas City Federal Reserve. Anyone who knows Powell knows that “data dependent” is tattooed across Powells mid-section and will be inscribed upon his headstone. With that in mind traders are going to comb through every aspect of his words, tone, and even body language to decipher what he is “actually” saying.

The real reason for a September cut is no longer seen as a given has to do with the info revealed in the July Minutes in Which only two members voted to cut rates in September. For that reason, gold will continue to face an uphill battle no matter what is said Tomorrow. This can be seen on gold’s daily chart showing 6 of the last 9 trading sessions resulted in gold closing lower. Over the past 10 day’s gold futures have given up over $100 of value and where last seen at $3,384.50.

Gold has minor drawdowns on the eve of Powell Speech_1

The fact that gold is still near record levels shows gold’s resilience since making the first of a serries of all-time highs on April 22nd. In fact, gold has only given up 3.90% since the close of that day. Over eighty days ago gold breached $3,300 for the fist time in history and for the last 90 days gold has faced many different bearish forces and came out on top every single time. The real drivers of gold’s price remain strongly bullish so regardless of what is said tomorrow gold will likely remain on its current trajectory and at worst could experience a minor, short lived pullback. As long as $3,300 is unbroken support gold can only get stronger from here.

Source: Kitco

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Michelle

Economic

Stocks

Wall Street's main indexes were set to open higher on Friday following a recent string of losses as investors awaited Federal Reserve Chair Jerome Powell's speech at the Jackson Hole Symposium for insights into the interest-rate path.

At the Wyoming research conference last year, Powell had promised to lower rates and support the job market when the unemployment rate started to rise, while in 2022, he underscored the central bank's inflation-fighting rigor.

Powell's address, expected at 10 a.m. ET, could prove pivotal in shaping the rate-cut expectations for September.

Michael Matousek, head trader at U.S. Global Investors, said Powell was going to "take the cautious approach".

"The tariffs are really starting to kick in, so he's still going to put some caution out there and state that he wants to look at data, see how things happen, because you didn't have the tariff effect kick in until early in the summer," Matousek said.

Markets had initially ramped up the bets following a weak payrolls report at the start of August and after consumer price data showed limited upward pressure from tariffs.

Traders now see a 69.5% chance of a 25-basis-point rate cut next month, down from an 85.4% chance a week ago, according to the CME FedWatch Tool.

Other Fed officials speaking on Thursday appeared to be less keen on the idea of a rate reduction next month.

Earnings reports from big-box retailers including Walmartearlier this week offered a mixed picture as investors sought fresh signals on the broader health of the American consumer amid ongoing tariff pressures.

Against this backdrop, all three main U.S. stock indexes are set for weekly losses, with the S&P 500and the Nasdaqon pace for their worst weekly showing of the month.

The S&P 500 took its string of losses to a fifth straight day on Thursday. A broad-based selloff in heavyweight technology stocks has kept U.S. equities pressured this week.

Information technologywas the week's worst hit sub-sector, while energyand real estatewere on track for mild weekly gains.

Meanwhile, UBS Global Wealth Management lifted its year-end target for the S&P 500 to 6,600 points from 6,200.

At 08:12 a.m. ET, Dow E-minis (YMcv1) rose 132 points, or 0.29%, S&P 500 E-minisgained 12.50 points, or 0.20%, and Nasdaq 100 E-minisadded 32.75 points, or 0.14%.

Among top movers, Nvidiaslipped 1.3% in premarket trading after reports the chipmaker had asked Foxconnto suspend work on the H20 AI chip, the most advanced product the company is permitted to sell to China.

Google-parent Alphabetgained 1.3% after reports the company has struck a six-year cloud computing deal with Meta Platformsworth more than $10 billion. Meta shares last rose 0.2%.

Intuitdropped 6.3% after the TurboTax-maker forecast first-quarter revenue growth below analysts' estimates due to sluggish performance at its Mailchimp marketing platform.

Workdayshed 4.4% after the human resources software provider provided an in-line outlook for the current quarter.

Source: Reuters

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Adam

Forex

The Canadian dollar is unchanged on Friday, trading at 1.3912. Earlier, USD/CAD hit 1.3917, its highest level since May.

Canada's retail sales expected to rebound

Canada wraps up the week with the June retail sales report, which is expected to rebound with a gain of 1.5% y/y. This follows a 1.1% decline in May, as consumers cut back on spending when US tariffs took effect in April.

The trade war between Canada and the US continues but consumers have had time to adjust to the new reality of tariffs and the markets expect a strong rebound in consumer spending.

It is somewhat surprising that the US has concluded trade agreements with the EU and Japan but not Canada, which is one of the largest trading partners of the US. Canada sends about 75% of its exports to its southern neighbor, so it cannot afford a prolonged trade war with the US. President Trump's sharp rhetoric about annexing Canada and turning it into the 51st state has touched a raw nerve with Canadians and had a major impact on the recent Canadian election.

All eyes on Jackson Hole

The heads of the major central banks have converged for a meeting at Jackson Hole, Wyoming. The star of the show will be Federal Reserve Chair Powell, who will deliver a speech later today. The markets have priced in a rate cut at next month's Fed meeting and are hoping for some confirmation from Powell.

The Fed must chart a rate path in challenging economic conditions. Inflation is still high, which would support maintaining rates, but the labor market is deteriorating, which supports the case to lower rates and boost economic activity.

What should be the Fed's priority? There is a split among members, as reflected in the rare split vote at the July meeting. The majority of the FOMC members, which voted to hold rates, judges the upside risk of inflation to be the primary concern, while the two members who voted to lower rates are most concerned by softening employment. The Fed meets next month and is widely expected to deliver its first rate cut since December 2024.

USD/CAD Technical

USD/CAD is putting pressure on resistance at 1.3926, which has held since May. Above, there is resistance at 1.3941

There is support at 1.3897 and 1.3882

Canadian dollar eyes retail sales report, markets await Powell speech_1

USD/CAD 1-Day Chart, Aug. 25, 2025

Source: marketpulse

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Adam

Stocks

U.S. stock index futures edged higher Friday, with investors wary in anticipation of more economic cues from Federal Reserve Chair Jerome Powell’s address at the Jackson Hole Symposium.

At 05:20 ET (09:20 GMT), Dow Jones Futures rose 125 points or 0.3%, S&P 500 Futures gained 15 points, or 0.2%, and Nasdaq 100 Futures climbed 30 points, or 0.1%.

The major indices closed lower Thursday, with the broad-based S&P 500 posting a fifth straight day of declines.

As of Thursday’s close, all three major averages were headed for a losing week. The S&P 500 is off 1.2% week to date, the NASDAQ Composite is down 2.4% and the Dow Jones Industrial Average is on pace for a 0.4% slide.

Powell speech at Jackson Hole in focus

Powell is set to speak at the Jackson Hole Symposium later in the session, potentially offering up more cues on the economy and the Fed’s plans for interest rates.

His address comes amid increasing doubts over whether the Fed has enough impetus to cut rates in September.

The minutes of the Fed’s late-July meeting showed policymakers still remained cautious over cutting interest rates in the near-term, especially amid uncertainty over the inflationary impact of President Donald Trump’s trade tariffs.

Policymakers were also seen focusing more on managing inflation than stemming more labor market weakness.

Kansas City Fed President Jeffrey Schmid, a voting member, said the central bank isn’t rushing to cut interest rates, pointing to inflation still running above its 2% target and a resilient labor market.

Separately, Cleveland Fed President Beth Hammack, a non-voting member, voiced concern Thursday that stubborn inflation may rule out an interest-rate cut in September.

Fed fund futures are pricing in a 73.1% chance the Fed will cut rates by 25 basis points in September, down sharply from the 90.2% chance seen a week ago, CME Fedwatch showed.

UBS lifts S&P 500 targets

The second-quarter earnings season is now largely finished, and UBS has lifted its price targets for the S&P 500, citing strong second-quarter earnings and improved economic conditions.

The investment bank increased its year-end S&P 500 target to 6,600 and its June 2026 target to 6,800, with the index having closed Thursday at 6,370.17.

Second-quarter earnings season proved particularly strong, with S&P 500 earnings growing at 8%, exceeding UBS’s initial 5% expectation. The "Magnificent 7" tech stocks delivered 30% growth, surpassing the bank’s 20% forecast. The median company beat estimates by 4.5 percentage points, higher than the typical 3.5 percentage point beat.

UBS noted that third-quarter guidance was also positive, suggesting no slowdown in profit growth despite tariffed goods now reaching store shelves.

On an individual corporate level, both Intuit (NASDAQ:INTU) and Zoom Video Communications (NASDAQ:ZM) will be in the spotlight after the companies posted results after the close Thursday.

Meta Platforms (NASDAQ:META) signed a $10 billion deal with Alphabet’s Google (NASDAQ:GOOGL), the Information reported, which will see the Facebook owner use Google Cloud’s servers, storage, and other services over the next six years.

Meta, along with Wall Street’s so-called AI Hyperscalers, is racing to build superintelligent AI amid growing calls from investors for returns on the hundreds of billions of dollars poured into AI development.

Crude set for winning week

Oil prices edged higher Friday, on track to snap a two-week losing streak, amid increasing signs that peace negotiations between Russia and Ukraine were stalling.

At 05:20 ET, Brent futures gained 0.1% to $67.68 a barrel, and U.S. West Texas Intermediate crude futures rose 0.1% to $63.54 a barrel.

Both contracts climbed more than 1% in the prior session. Brent has risen 3% this week, while the WTI has gained around 1.4%.

The three-and-a-half-year war in Ukraine continued unabated on Thursday, and traders are pricing in more risk that the supply of Russian crude to the global market remains disrupted.

Oil prices were also supported by a larger-than-expected drawdown from U.S. crude stockpiles in the last week, indicating strong demand.

Source: Investing

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Warren Takunda

Stocks

London stocks had pared losses to trade flat by midday on Friday after closing at a fresh record a day earlier for the third session in a row, as investors eyed a speech by Federal Reserve chair Jerome Powell at Jackson Hole.

The FTSE 100 was steady at 9,311.94.

Dan Coatsworth, investment analyst at AJ Bell, said: "The FTSE 100 saw a subdued start on Friday after achieving a record close above 9,300 yesterday.

"This followed more selling on Wall Street overnight, albeit of moderate persuasion, as investors fret about the message Federal Reserve chair Jerome Powell might deliver at the Jackson Hole summit.

"Investors had been expecting a rate cut from the Fed next month so if Powell were to say anything suggesting rates might be kept on hold, it could see stocks come under greater pressure."

On home shores, a survey out earlier showed that improved confidence about personal finances pushed consumer sentiment higher in August, though concerns about rising inflation and unemployment continued to dampen the overall mood.

The GfK consumer confidence index rose by two points to -17 this month, its highest level this year, with four of the five components of the gauge improving from July.

Notably, sentiment gauges around consumers' personal financial situation over the past 12 months and expectations for the coming year both rose by three points to -4 and +5, respectively.

GfK said the brighter outlook was most likely due to the Bank of England cutting interest rates to a two-year low earlier this month.

However, Neil Bellamy, consumer insights director at GfK, said there were still "many clouds on the horizon in the form of inflation - the highest since January 2024 - and rising unemployment. There’s no shortage of speculation, too, about what the autumn Budget will bring in terms of tax rises."

Bellamy added: "While August’s Overall Index Score of -17 is the best this year, consumer confidence continues to move in a very narrow band, and there’s no sense that it is about to break out into fresher, more optimistic territory. The UK’s consumers are still in wait-and-see mode, and any surprises could result in sudden and sharp changes in sentiment."

On the corporate front, Standard Chartered jumped to the top of the FTSE 100 after the bank welcomed what it described as a favourable filing from the US Department of Justice in a long-running civil case involving allegations of sanctions breaches.

The bank said the DoJ’s latest position in the so-called ‘Brutus’ case confirmed that the claims, first brought by a former employee and his associates more than a decade ago, were "false" and repeatedly dismissed by US courts.

Morgan Advanced Materials gained after agreeing to sell its Molten Metal Systems business to Vesuvius for £92.7m.

Elsewhere, Blackstone emerged as the winner in the race to buy Warehouse Reit, after rival bidder Tritax Big Box Reit said it would not increase its offer for the commercial landlord.

Warehouse last month changed its endorsement after Blackstone confirmed it would allow shareholders to receive a dividend from Warehouse as part of its £489m bid.

Tritax had offered a cash and stock deal worth around £485.2m, but on Friday said it did not believe that increasing the financial terms would be in the interests of its shareholders.