Market Pulse

This weekly publication provides a brief note on market views heading into the week, highlights what we're watching, and important news ahead.

Jeff Terrell, CFA

Senior Investment Strategy Analyst

Truist Advisory Services, Inc.

Chip Hughey, CFA

Managing Director, Fixed Income

Truist Advisory Services, Inc.

Dylan Kase, CFA

Investment Strategy Analyst

Truist Advisory Services, Inc.

In focus

Chair Jerome Powell’s speech at the Jackson Hole Economic Symposium on Friday. During his speech, Chair Powell stated that tapering could begin this year and that the economy has made “substantial further progress,” which was a condition that the Fed has said was necessary when evaluating when to taper asset purchases. While our read on his speech was that it was fairly boilerplate and reiterated much of what he has said in the past few months, market participants and media reports took it as a fairly dovish speech. The result was the S&P 500 reaching its eleventh record high in August and 52nd of the year.

Additionally, the Jackson Hole Economic Symposium was likely one of the last large public appearances Chair Powell will make before the White House has to decide on whether or not to renominate him as Chair when his term ends in February. Powell has broad bipartisan support in Congress and is said to also have the backing of several officials in the Biden administration, including Treasury Secretary Janet Yellen, Powell’s predecessor at the Fed. However, some Senators have criticized Powell as being too lenient on the regulatory front and have publicly called for President Biden to select someone who would be tougher with regulation. This could also be achieved by replacing Vice Chair Richard Clarida and/or Vice Chair for Supervision Randal Quarles. A decision is expected this fall, though we think it is likely that Powell gets tapped for another term.

A look back

  • The S&P 500 posted a gain of 1.5%, setting a new record high on Friday. Stocks in international developed and emerging markets also had strong gains, pushing the MSCI ACWI to a return of 2%.
  • The 10-year U.S. Treasury yield rose by five basis points on the week.
  • Fed Chair Powell said in a speech at Jackson Hole that the Fed could start tapering bond purchases this year, in line with comments he has made earlier. He didn’t provide any specific details around the timing or pace of taper.

A look ahead

  • Investors will look to see how the Delta variant impacted several economic data points that are being reported this week, especially on the jobs and employment front. Following Chair Powell’s speech at Jackson Hole where he said taper could begin this year, markets will be watching for data that could speed up or slow down the tapering timeline.
  • Economic releases: Conference Board Consumer Confidence, ADP Employment Change, ISM & Markit Manufacturing & Services, Durable Goods Orders, and the Unemployment Rate.

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