MKM’s Darda Sees Powell Using Jackson Hole to Hint at Taper
(Bloomberg) -- Financial markets may receive a welcome signal from Federal Reserve Chairman Jerome Powell this week, one that could keep stocks on course and credit markets steady.
“Powell is going to try not to make big waves,” Michael Darda, chief economist and market strategist at MKM Partners, said in a Bloomberg TV Surveillance interview Monday. “The center of intellectual gravity on the Fed is definitely moving toward announcing a taper this year, probably commencing the taper before year end, provided the labor market holds up. I think what Powell will hint at is what we already know, that a taper will be announced likely this fall.”
Darda said the labor market appears poised to continue to make gains.
“This past week, we saw jobless claims hit the new post-pandemic low,” he said. “At least so far, the labor market looks fairly undisturbed and unperturbed.”
Powell will speak Friday at the annual Jackson Hole symposium, conducted via video teleconference because of Covid protocols. Investors are looking for any clues as to when the central bank will begin to pare its monthly purchases of securities, a tool used to provide liquidity during the pandemic, and when a rate increase may be considered.
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