Brandon Stitzel

At his Jackson Hole speech, Federal Reserve Chair Powell indicated that the FOMC must continue to raise the Federal Funds rate and hold it at a restrictive level until it is confident inflation is under control. He specified that while the July CPI inflation reading was welcome news, it would not be enough on its own for the FOMC to change course on raising interest rates to an intentionally restrictive level.

Unlike in typical expansions, a strong labor market and consumer spending are leading to market volatility and turmoil. Stuck between either rising interest rates or falling consumer demand, many companies are being forced to lower earnings estimates and make difficult decisions.

Released Fed minutes show a growing hawkish and tightening mindset across FOMC members. The release drove rates higher as members called for fast balance sheet reduction and double rate hikes in upcoming meetings. Meanwhile, commodity hedges for petroleum products break down.