Market Focus on Powell's Jackson Hole Speech as Rate Cut Expectations Face Headwinds

Both U.S. stocks and crypto markets have experienced significant turbulence recently. Just as ETH reached its all-time high and market sentiment was gripped by FOMO euphoria, prices took a sudden downturn. Within days, ETH plunged below $4,100 from its peak, marking a nearly 20% correction.

This dramatic shift from optimism to pessimism caught investors off guard. As this market volatility unfolds, traders are now keeping their eyes on Wednesday's release of the Federal Open Market Committee meeting minutes from the July meeting, and Federal Reserve Chair Jerome Powell's speech at Jackson Hole scheduled for Friday.

Polymarket data show September rate cut odds have plunged to 57% from a previous high of 81%, while the probability of no rate cut has surged from 12% to 40%, indicating a significant shift in market expectations for Fed policy action.

Cleveland Fed President Hammack's explicit statement that current economic data doesn't support a rate cut caused Bitcoin to briefly dip below $113,000.

Her remarks suggest Chairman Powell continues to have support at the central bank for his hawkish stance. Her stance highlights the Fed's ongoing concern about inflation and suggests Powell's team may maintain their cautious approach.

Meanwhile, Trump continues to pressure Fed Chair Powell. He has repeatedly criticized the Fed's policy stance and Powell's failure to implement rate cuts earlier this year. This political pressure adds another layer of uncertainty to the market.

Powell's upcoming Jackson Hole address is viewed as a crucial moment in his tenure. Market participants are closely monitoring any hints about future policy direction amid the delicate balance between inflationary pressures and economic growth.

The combined political and economic pressures have elevated the significance of this speech. Here is SPY's historical performance around Powell's Jackson Hole speeches.

However, a market analystsaid, "History doesn't repeat, but it does rhyme—markets tend to react more to Powell's tone than the actual economic data itself."

Source: @StockMKTNewz

"The Fed faces a difficult balancing act — cut too soon and risk reigniting inflation, wait too long and growth risks deepen," said Nick Ruck, director at LVRG Research.