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Jackson Hole Symposium: Powell’s Address Takes Center Stage Amid Global Economic Shifts
The annual Jackson Hole Symposium hosted by the Kansas City Fed is underway, with Chairman Jerome Powell set for 10:05 AM ET. It was a meeting of interest for investors, with hopes that the Fed would decide not to continue with its current monetary policy. At Thursday’s meeting of the U.S. Federal Reserve, Jerome Powell said in his speech that there will be pain ahead in their fight against inflation. Powell’s words are considered a huge indication of more interest rate hikes this year and in the first half of 2024. What’s intriguing is that, since that speech, economic growth has accelerated at an astonishing rate. Notably, the unemployment rate has been exceptionally low, breaking historic lows. The S&P 500 (SP500) struck its lowest point in the bear market just a month after Powell’s 2022 speech. Despite the recent stock market downturns, the benchmark index has been on an upward trend since then, posting an outstanding 22% gain.
Lucky for Wall Street, after the meeting, Wall Street edged higher, recovering some from yesterday’s shooting session. The S&P 500 benchmark added 0.83%, gaining 33 bps. The tech-heavy Nasdaq Composite rose by a solid 1% to 13.589 bps, while the Dow was up by 0.92% to 34.424 bps. The U.S. dollar indexes have remained unstable for the past two weeks, swinging between highs and lows each session. The U.S. dollar index roughly added 0.09% to 104.05.
Back to the Fed meeting: Investors believe that the Federal Reserve official will keep the September rate the same as the previous one. On top of that, there is a high probability of key interest rates rising by a quarter of a basis point in November as well.
In other economic news, there is another major event that has occurred in the global economy. The BRICS nations have extended invitations to six additional countries to join their ranks next year. This move is part of the bloc’s efforts to challenge the predominant influence of Western powers on the international stage. The projected extension has far-reaching consequences, notably for Russia and China. Both countries have advocated for a new world order that would create a more balanced global environment and reduce reliance on the US dollar (as measured by the DXY index). This project intends to lessen the dollar’s dominance in global commerce and finance.
As we have seen, the dollar has been in a sweating condition ever since the declaration of this equal new world order. China and Russia have already started accepting local currency for their financial transactions. Add to that the OPEC members pressures, of which Saudi Arabia and Russia are both members. The Pertulum agency has announced that there will be a new cut in oil supplies, and that could affect the global supply chain. Crude oil prices showed some strength on Friday, yet they are on track for a second straight week of stability. Worries about reduced demand from China, higher U.S. supply, and a stronger dollar have kept prices in check. The dollar’s recent surge, reaching its highest level since June, is impacting oil markets by raising the cost of crude for global buyers.
