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In a week with little in the way of fresh macro data, investors have been glued to just two events: the release of the FOMC meeting minutes on Wednesday and Jerome Powell’s speech at Jackson Hole on Friday. Both have become focal points for markets hungry for clarity. The initial pullback was partly tied to comments from Treasury Secretary Scott Bessent, who initially dismissed the idea of the government buying Bitcoin for its strategic reserves. He later clarified that officials are still exploring budget-neutral ways to add to their holdings, but the damage was already done.
Recent price action also tells us something about sentiment: investors appear increasingly doubtful that Powell will signal a pivot at Jackson Hole. Crypto ETP outflows have accelerated this week, totalling about US$2bn so far — roughly $927m from bitcoin and $1.14bn from Ethereum though month-to-date flows remain positive at +$1.8bn. Yet between the softer tone of the Fed minutes and the dismal payroll report, the odds of a more dovish Fed have crept higher. Still, the September decision will rest heavily on data we’ve not yet seen, particularly payrolls and Core PCE. On balance, Powell is unlikely to hand investors the certainty they crave.
FOMC minutes
The July meeting minutes laid bare the Fed’s internal divisions. Most participants argued that inflation risks outweighed concerns about a slowing jobs market, with tariffs a central driver of that anxiety. A majority of the 18 policymakers judged the upside risk to inflation as the greater threat, stressing that inflation has lingered above 2% for too long. Some worried that if tariff effects proved persistent, inflation expectations could drift off anchor.
Not everyone agreed. A few officials said risks to the Fed’s dual mandate looked evenly balanced, while a couple flagged more serious concerns over the labour market. Although the minutes didn’t name names, it was no surprise that Governors Christopher Waller and Michelle Bowman dissented, citing weakening jobs data as justification for their push for a cut.
Looking ahead to Jackson Hole
Powell has been conspicuously quiet on policy since the release of the shockingly weak July employment report, which made the case for easier policy far stronger. At Jackson Hole, he’s expected to keep options open, avoiding any firm commitment to a September cut. Markets may be pricing in easing, but Powell is likely to remind us that the path is still uncertain.
The irony is that just two weeks ago Powell insisted the labour market wasn’t deteriorating. Within days, downward revisions to payrolls suggested not just weakness, but a labour market potentially skirting recession. And with this year’s symposium themed “Labour Markets in Transition,” Powell won’t be able to sidestep the issue. Expect him to argue that unemployment rates are a better gauge of labour health than payrolls right now, and perhaps point to immigration policy as a factor reshaping worker supply. The challenge for that narrative is simple: if shortages were biting, wage growth should be accelerating. It isn’t.
Hype versus reality
Talk of a “Jackson Hole Pivot” is probably overblown. With Core PCE and another jobs report due before September, Powell will likely stay deliberately vague. Investors should brace for disappointment if they’re hoping for bold guidance.
