Financial markets are largely focused on Federal Reserve Chair Kevin Warsh's upcoming address at the Jackson Hole Symposium, as investors seek clearer signals on the Fed's strategy to combat inflation. This anticipation comes after a week of mixed economic data, including a hotter-than-expected Personal Consumption Expenditures (PCE) reading and continued inflation warnings from several Fed officials. The market is looking for more than just hawkish or dovish statements, hoping for concrete insights into how the Fed plans to balance inflation risks with the labor market outlook and the path of interest rates. Futures markets currently imply about a 35% chance of a Fed rate hike at its September 16 meeting and fully price in a hike by December.
The week saw a significant boost in tech stocks, primarily driven by chipmaking giant Nvidia's strong earnings report and optimistic outlook. Nvidia's shares jumped 8.7% after the company projected 70% revenue growth for 2027, far exceeding analyst expectations and reaffirming the strength of the AI boom. This tech rally also saw Salesforce surge 22.6% after raising its annual revenue and profit forecasts, and CrowdStrike climb 20.5% after exceeding earnings estimates and raising its annual revenue forecast. While the S&P 500's Information Technology sector rose 3.4%, other sectors largely declined, highlighting a market driven by tech gains amidst broader economic concerns.
Commodity markets also saw some movement, with oil prices heading for their first weekly fall in three weeks. Brent crude fell 0.6% to $89.2 a barrel, despite earlier trading showing oil prices up 2%. Gold, after falling 1.4% to $4,594 per ounce on Wednesday, later firmed slightly on the day and week, trading at $4,561 an ounce. Treasury yields remained largely unchanged ahead of Warsh's speech, though the 30-year Treasury yield edged up 1 basis point to 5.20% on Friday, while the 10-year yield was flat at 4.68%. Bitcoin also saw a notable rise, returning above the $80,000 mark. The US dollar remained flat overall, with the Aussie dollar being the biggest G10 climber, while the Colombian peso continued its decline. Inflationary pressures in the US are still a significant concern, with the core PCE index rising 0.2% month-on-month and 3.3% annually, further fueling the anticipation for Warsh's remarks.
Warsh's first few months as chair have been challenging, marked by rising longer-dated Treasury yields, which some investors attribute to a perceived lack of concrete measures to address persistent inflation. His speech is expected to focus on the supply side of the economy, and while he is unlikely to be overly declarative, he may express skepticism about previous policy assumptions and adopt an anti-doctrinaire approach. The market is particularly keen on how his message will influence the perception of the interest rate path over the coming months, beyond just the immediate next meeting.
