Fed chair: Fight against inflation continues

Aug. 28:

Markets are reacting to Federal Reserve Chair Jerome Powell’s comments at the central bank’s annual Jackson Hole retreat Friday. He made it clear the fight against inflation is not over.

It seems likely that the Fed will pause rate hikes at the Sept. 20 Federal Open Market Committee meeting, but rate increases at subsequent meetings cannot be ruled out. As of this morning, Fed funds futures indicated a 65% chance of a 0.25% rate increase Nov. 1. Previously, the chances were less than 50%. It may also take longer to bring rates down than had been previously anticipated. 

Treasury yields popped up following Powell’s speech but have since retreated and there has been some flattening in the yield curve. The Dow traded up this morning.

Economic calendar

Tuesday, Aug. 29

• S&P CoreLogic Case-Shiller Home Price Index
• FHFA House Price Index
• Job Openings
• Consumer Confidence

Wednesday, Aug. 30

• ADP Employment Report
• Q2 Gross Domestic Product
• Pending Home Sales

Thursday, Aug. 31

• Personal Consumption Expenditures Price Index
• Personal Income/Personal Spending
• Weekly Initial Jobless Claims

Friday, Sept. 1

• Monthly Employment Report
• Construction Spending
• ISM Manufacturing PMI

Treasury calendar

Monday, Aug. 28

• $45 billion auction of two-year Treasury notes
• $46 billion auction of five-year Treasury notes

Tuesday, Aug. 29

• $36 billion auction of seven-year Treasury notes

By Mike Kraft, Executive Director and Commercial Real Estate Treasurer for Commercial Banking