The Tell: Why Fed Chair Powell may not be ‘overly hawkish’ at Jackson Hole, according to this JPMorgan portfolio manager

by | Aug 24, 2022 | Stock Market

U.S. stocks have slumped in the past few days amid fears that Federal Reserve Chair Jerome Powell may become more hawkish at his upcoming speech at the Jackson Hole symposium in Wyoming on Friday, according to JPMorgan Chase & Co.’s Phil Camporeale.  “I’m not sure why Chair Powell would have to be overly hawkish on Friday,” said Camporeale, who invests across asset classes as a portfolio manager for J.P. Morgan Asset Management’s global allocation strategy, in a phone interview. “They’re not priced to ease anytime soon.”

The Fed has been in the process of tightening its monetary policy through large interest rate hikes to combat high inflation, with the market pricing in additional rate increases ahead in 2022.  Camporeale said the federal funds rate is seen peaking at around 3.75%, compared with a target range of 2.25% to 2.5% currently, meaning more tightening is on the horizon before the Fed would pivot and begin easing policy. It’s currently a “close call” as to whether the Fed will hike by one half or three quarters of a percentage point in September, said Camporeale. “We think inflation has peaked,” although the Fed has more work to do cooling the economy to bring soaring inflation under control, he said. That makes for an easier investing environment because, unlike in the first half of the year when both stocks and bonds were pummeled amid fears of rising inflation and higher interest rates, the market risk has “morphed” into concerns over a slowing economy and people “debating whether growth is going to deteriorate further.”  In an environment of easing inflation and slowing economic growth, bonds can onc …

Article Attribution | Read More at Article Source

Share This