In previous years, the Chairman of the Federal Reserve has used the Jackson Hole Meeting, hosted by the KC Fed as a platform to talk about new/changing policies. The 2013 meeting takes place this weekend and current Fed Chair Ben Bernanke is noticeably absent. In fact, only a handful of Fed Governors will attend, among them Vice Chair and potential Chief Janet Yellen will be present. With little to decide or change in the way of policy it did not seem this meeting would be that critical but after Wednesday’s market action, the message taken away may have broad implications.
After the release of the Fed minutes on Wednesday market volatility dropped sharply, and then a good rally ensued – then the sellers hit the bid and markets closed on their lows in a massive reversal of fortune. Apparently there was some confusion, but make no mistake – that will be removed as quickly as you can say QE.
But we knew this already, didn’t we? In fact, recent speeches/appearances by Fed Governors were consistent with the debate over when/whether to cut back on the bond purchases (I won’t use taper, as that is a media word not uttered by the actual Fed).
There is not much out there to move markets to any trend so many players will grasp for whatever they can get to game the market. The volume is razor thin, markets are up to heights not many expect and the bond market is under duress. After the recent turbulent days expect to see some less combative language from Jackson Hole and some removal of uncertainty. After all, the markets like certainty.