Walsh Faces Crucial Moment at Jackson Hole as Dollar Crisis Deepens
The upcoming Jackson Hole conference will be a crucial moment for Federal Reserve Chair Walsh to regain trust in his leadership. The US dollar faces a crisis of confidence due to weakening fundamental data and the US Treasury repo crisis, with market momentum suggesting the latter is a significant contributor. The recent consecutive rises in the euro, gold, and Bitcoin are also driven by these factors.
A seasonal pattern shows weaker third-quarter data, but according to the Citi Surprise Index, the US economy has seen some marginal recovery in late August, and both PMI and corporate earnings are strong.
The real concern lies with the fiscal framework, as long bond yields have paused briefly before resuming their rise. The 10Y yield remains around 4.7%, indicating that fiscal concerns are driving market movements.