• Jerome Powell to speak at the Jackson Hole Symposium today
• Markets will look for any hints regarding the terminal rate
• Volatility to surge during Powell's speech

Whenever an important economic event is scheduled on the last day of the trading week, the markets move in tight ranges in the days before. It was the case this week as the Fed Chair will speak at the Jackson Hole Symposium later in the North American session.

He will address the economic outlook, a subject of much interest to financial market participants.

Last year, for instance, Jackson Hole was supposed to be a non-event. However, Powell changed his speech in the last minutes, triggering a selloff in the equity market.

The speech delivered last year was called “There will be pain.” Powell emphasized that pain in the labor market should come next.

However, what followed in the next twelve months is nothing short of impressive.

First, the S&P 500 index is up 11% since last year’s speech. Second, the odds of a recession are very low (2.6% currently) despite the 5% funds rate.

So, what should the market participants expect from Powell’s speech today?

Has the Fed reached the terminal rate?

One of the biggest unanswered questions in financial markets regards the Fed’s terminal rate. Is it reached? Is the current tightening cycle over?

Any hint from Powell that the Fed has reached its terminal rate should send stocks up and the dollar lower.

On the other hand, Powell might look confident as the economy is good with a 5% funds rate, so why not see how it reacts to 6%?

However, it is unlikely that the Fed will be so explicit. Instead, Powell will probably hint at what is to follow, focusing on the Fed’s ongoing inflation fight.

One thing is certain: Today’s volatility will surge during Powell’s speech as markets try to decipher the Fed’s message.  

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