“My confidence has grown that inflation is on a sustainable path back to 2%,”
Jackson hole is very important indeed…
Key Quotes
“The cooling in labor market conditions is unmistakable.”
“It seems unlikely that the labor market will be a source of elevated inflationary pressures anytime soon.”
“We do not seek or welcome further cooling in labor market conditions.”
“The time has come for policy to adjust.
If August comes in weak, look for 50. If strong, 25.
Summary Comments:
Gold, silver, and stocks all spike on the speech. They had been strong all morning and anticipation of this type of an event.
Over the last half hour they have begun to give back gains. Although we have no position to this affect, we truly think that selling the first rate cut is a great idea; And would consider for ourselves acting on it now in options expressions. Then, depending on how the market reacts to the next employment report, reassessing the situation.
Markets react:
Everything is up that should be up. The only laggard for now is bonds with a muted response…
Looking Forward:
If we are right, or if more aptly, Hartnett is right about selling the first rate cut, then you should expect a dip in gold as well. There are three factors right now that are top of mind for us.
The CTA exposure in gold and silver is horrendously too long. So far noone cares
Yesterday’s dip did not follow through at all, implying that there are more buyers who want to catch this then there are longs panicking to sell Specifically, we’re referring to Bullion Banks, who are buying the liquidations coming out of CTAs.
if Hartnett is right gold should drop along with stocks if it drops at all. Sell season is something we always worry about, but we’re getting less confident that the market will sell off any significant amount.
With all the price action this year that has been predicated on rate cuts it certainly feels like the cuts themselves should be a “sell the news” event
With all the price action this year that has been predicated on rate cuts it certainly feels like the cuts themselves should be a “sell the news” event
Completely agree.
Mmm
"They had been strong all morning and anticipation of this type of an event."
Jpow Comments leaked to Bullion banks, or is an advance "embargo " copy given to media 30 or 60" prior?
Believed