Synopsis:

BofA provides insights into the upcoming Jackson Hole Symposium, scheduled for August 22-24, addressing key questions about market expectations, potential Fed actions, and historical reactions.

Key Q&A:

1. When and What is the Topic?

   • The symposium will take place from August 22-24, with the theme "Reassessing Effectiveness & Transmission of Monetary Policy."

2. Why Does the Market Care?

   • The symposium often features speeches by Fed Chairs and other officials. Historically, significant policy changes have been hinted at during this summer intermeeting period.

3. When is the Agenda Released?

   • The agenda is typically released on the afternoon or evening of the first day, August 22.

4. Will Powell Speak?

   • It is likely but not yet confirmed. Fed Chairs usually participate, though there have been exceptions (e.g., Yellen in 2015, Bernanke in 2013).

5. What are the Expectations for Jackson Hole?

   • The Fed is expected to express confidence in achieving 2% inflation and signal a potential rate cut in September. There may be a shift in focus from inflation control to labor market stability, with the market anticipating limited resistance to rate cut pricing.

6. What is the Expected Market Reaction?

   • Rates: Anticipated to dip even if the messaging is marginally hawkish. Rate gamma is expected to drop post-symposium.
   • FX: Likely to see a small impact, with limited Fed pushback on market pricing.

7. What Has Been the Historical Reaction to Jackson Hole?

   • Rates: Typically, there is a sell-off leading into Jackson Hole, partial retracement the week after, and another sell-off leading into September. Rate gamma tends to drop after the symposium.
   • FX: Historically sideways, with 2022 being an outlier.

Conclusion:

BofA expects the Jackson Hole Symposium to provide signals regarding the Fed’s confidence in reaching its inflation target and possibly hint at a September rate cut. While markets anticipate limited resistance to cut pricing, historical trends suggest some volatility in rates leading into and following the event.