Trade talks and Fed Jackson Hole meeting could mean August volatility

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The dog days of August could be volatile this year, as trade and the Fed dominate in the week ahead.

Markets will be fixated on the always important annual Fed symposium in Jackson Hole, Wyoming, where Fed Chairman Jerome Powell speaks Friday, and central bankers will hold high level discussions about policy and the economy.

The turmoil in Turkey could also remain a focus, but it’s trade talks that could dominate, and there’s a chance they could become a positive catalyst.

European trade officials are in Washington Monday for meetings, and U.S. talks are expected to continue with Mexico, with a resolution appearing close. But it is the trade talks with China Wednesday and Thursday that are getting the most attention since there have been no signs of progress, and another wave of tariffs are set to go into effect Thursday.

On Friday, The Wall Street Journal reported that U.S. and Chinese officials are holding talks on a possible way to end the trade dispute, with a potential November meeting between President Donald Trump and China’s President Xi Jinping.

“If you take the possibility of a trade war with China off the table for a few months that allows the market to work its way higher. This has been one of the market’s biggest worries. If you put it on the back burner, it’s a good thing,” said Ed Keon, chief investment strategist, QMA, a PGIM company.

A delegation from Beijing, led by Vice Commerce Minister Wang Shouwen, will hold meetings with U.S. officials led by the Treasury undersecretary, David Malpass.

2018-08-17 20:45:00

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