Appuntamento a Jackson Hole
Di seguito due commenti di Dave Lafferty, Chief Market Strategist di Natixis Global Asset Management, e di Philippe Waechter, Chief Economist di Natixis Asset Management, relativi al Jackson Hole Symposium in programma questo week end.
A cura di David Lafferty, Chief Market Strategist, Natixis Global Asset Management
Most observers expect few policy hints to come from the Jackson Hole symposium this year. The Fed’s position was largely laid out in last week’s release of the July FOMC minutes, leaving Yellen little reason to expound. Draghi will likely be even more cautious as his most recent comments in Sintra were considered hawkish, sending shockwaves through the European bond market with a mini-spike in rates. Because the Fed is already raising rates and has outlined its QE draw-down caps, there is a higher threshold for Yellen to disturb the markets. With more uncertainty around future policy, Draghi will have to walk more softly. Chair Yellen is expected to address financial stability in her comments. Investors may look for clues in her comments – specifically that promoting financial stability requires mitigating excessive leverage. This may be seen as a stronger justification for continuing the current rate hike path in spite of sub-par inflation. Market implied expectations of a December FOMC hike have fallen to about 1 in 3 (34%), so a strong articulation of remaining financial imbalances could be viewed hawkishly.
- Draghi is expected to address the broader conference theme of fostering a more dynamic global economy. With potential GDP restrained by low productivity and weak labor force growth in the developed world, Draghi might venture into whether monetary policy is an effective tool for promoting supply-side growth.
- It is unclear whether either central bank chief will go near inflation. Central bankers, especially at the Fed, have been perplexed by muted wage growth in the face of full employment. Will anyone reiterate their long-standing belief in the Phillips Curve, and by extension, make hawkish headlines?
- We expect currency and bond markets to be moved little by speeches at the symposium – unless someone makes a mistake. For now, the US dollar has steadied against the Euro. While the Euro has only regained about 40% of its 2014-15 losses, a continued climb against the greenback risks an even larger undershoot of the ECB’s inflation target. With the US and European economies both showing some strength, currency stability would seem to serve both Yellen and Draghi well. Neither central bank chief is looking to make headlines at this year’s event.
A cura di Philippe Waechter, Chief Economist, Natixis Asset Management
- I expect some hints on how the Fed and the ECB will adapt their strategy to the current situation and what will be their response to the Jackson Hole Topic which is “Fostering a Dynamic Global Economy”
- The current situation is that there is no growth acceleration in the US as productivity gains remain low while the inflation rate is now below the Fed’s target. So the Fed mustn’t hurry in normalizing its monetary policy. More than that as there is still no economic policy from the White House there is no need for a tighter monetary policy in one of the longest business cycle.
- But the Fed will manage its balance sheet and we don’t know ex ante the impact that this operation will have on the fixed income market. The Fed must be able to intervene if the new equilibrium is not stable. For me that the main reason for the Fed has to increase its rate. Just to have leeway in case of a negative shock on this adjustment.
- What remains impressive in the US is the fact that the business cycle is not able to create nominal pressures. This change the way the Fed has to fix its strategy
- On the ECB side, Mario Draghi must say that he will not do something that could hurt the recent recovery. In saying that, he will not feed an already strong euro. In Sintra, his speech was over interpreted as a signal that the QE will stop rapidly. It was a mistake of interpretation and he must take advantage of this symposium to explain that the QE will not stop rapidly and that there is still a need for low interest rates on every maturity in Europe. Current productivity gains are too low to imagine a tighter monetary policy.
- Sometime in the past, he has announced important measures as the OMT in 2012. We expect a speech that will explain that the monetary policy will remain accommodative for long in order to limit the upside on the euro.
- We need to understand what will happen on monetary policy side and have explanations from central bankers.
- We are in a rather strong situation on growth side specifically in the EA and we need to have hints on how they will be able to foster global growth. A monetary policy normalization could hurt growth and it’s too early to imagine specifically in the EA. A normalization could create a recession in the US and could hurt the recent recovery in the EA. That’s why we expect many explanations from central bankers on what they will do.
- I cannot expect that they won’t say something specific in this symposium. The audience is worldwide so if they have a message it is the good place to do it. If they say nothing there is a risk of credibility. Implicitly a silence would say that they do not understand precisely the current situation and that would be negative for markets.