The financial markets are set for a very busy day today, especially when it comes to announcements from the United States.
First of all, this whole week’s anticipation of the Jackson Hole symposium will finally culminate today as Federal Reserve Chairman Jerome Powell delivers arguably his most important speech so far in 2020. Powell is expected to provide an evaluation of the state of the US economy, especially considering the prolonged, heavy coronavirus outbreak in the country.
Due to the current conditions in the United States and the many long months of damage the economy took thanks to the pandemic, Powell will most likely reveal a massive softening of the Federal Reserve’s already dovish policy. Various Fed representatives have said multiple times that the central bank is not considering negative interest rates. However, Powell might announce that the current low interest rates will be here to stay for several years as the Fed lets go of its 2% inflation target and allows the rating to rise above that number.
Besides the revelations expected out of Jackson Hole, today we also have a regular influx of unemployment data from the United States in the form of jobless claims. The continuing jobless claims are expected to amount to 14.4 million, while the initial ones are forecasted at 1 million. There will also be a GDP report for the second quarter that many are looking forward to.
For now, US stock indices are slightly lower due to the expectations tied to Powell’s speech later today. But if everything goes according to the forecasts and a softer monetary policy is confirmed by the Fed Chairman, then stocks can make rapid gains.
Meanwhile, China and the United States have renewed their dispute over territories in the South China Sea. China tested new rockets in the vicinity, and the US responded with sanctions against more Chinese companies.
