Skip navigation Scroll to top
Scroll to top

LGT Navigator: Jackson Hole moves into the spotlight

August 22, 2022

As every year, the financial markets are eagerly awaiting Jackson Hole in Wyoming, where the regular meeting of central bank heads will take place from Wednesday. The speech by Federal Reserve Chairman Powell on Friday will receive the most attention, as investors are hoping for indications of the Fed's future monetary policy stance and assessments regarding inflation and economic developments. China's central bank reacted today with another key interest rate cut to the recently increasingly visible economic weakness.

Jackson Hole moves into the spotlight

On Friday (15:00 CET), Federal Reserve Chairman Jerome Powell will be in the spotlight. At the global central bank conference in Jackson Hole, Powell is expected to provide insight into the expected pace of anticipated rate hikes. Ahead of the meeting, top Fed officials have repeatedly indicated that the US central bank will continue to raise the benchmark rate until inflation returns to the two percent target. This has so far disappointed expectations that the Fed could slow its rate hike course due to weaker economic data.

In the run-up, interest rate and recession fears as well as profit-taking dominated events on the international stock markets. On Wall Street, the Dow Jones Industrial closed on Friday -0.86% lower than the previous day at 33,706.74 points, thus recording a moderate loss of -0.2% over the week. The broad S&P 500 declined -1.29% to end the trading session before the weekend at 4,228.48 points. The Nasdaq was down nearly -2%. Amid recession worries, defensive, low cyclical sectors such as telecoms, pharmaceuticals and food held up well, while cyclical/consumer sectors such as travel, auto and retail weakened.

In the bond market, US government bond prices came under increasing pressure ahead of the highly anticipated Federal Reserve meeting in Jackson Hole, and the yield on ten-year Treasuries rose to 2.97% in return.

Shares in the Asia-Pacific region were mixed on Monday. Chinese markets rose after China cut its benchmark lending rates. Hong Kong’s Hang Seng index was up around +0.2% and the Shanghai Composite was + about +0.6% higher. In Tokio, the Nikkei 225 traded about -0.5% lower. 

China's central bank cuts interest rates again

At the start of the week, the Chinese central bank eased two important reference rates for loans once again. The one-year interest rate that banks can offer to companies and households was cut from 3.7% to 3.65% and the five-year rate, which is the reference for mortgage loans, was cut from 4.45% to 4.3% – both rates are now trading at historic lows. With this, the People's Bank of China is trying to encourage commercial banks to lend more at cheaper rates to boost the economy. Last week, the central bank had already surprisingly eased two key interest rates to increase liquidity for banks.

Euro under continued pressure

The euro remains under pressure and approached parity against the US dollar. The last time this was the case was in mid-July. The background to this is a probable further widening of the interest rate differential, as the Federal Reserve is likely to continue its fight against inflation with further – possibly even more substantial – interest rate hikes. The European Central Bank, on the other hand, appears hesitant, but also faces a delicate challenge due to the looming energy crisis resulting from the conflict with Russia. The European single currency is also being burdened by political uncertainties within the EU. In Italy – the third-largest economy in the euro zone – there is a risk of a slide to the right on September 25 if the far-right “Fratelli d'Italia” led by party leader Giorgia Meloni succeeds in seizing power in Rome.

In Germany, producer prices continue to rise at record pace

At the producer level, prices in Germany increased by +37.2% on an annual basis in July, the strongest increase since the start of the data series in 1949. Also, in the monthly comparison the price increase remains violent with +5.3%. The background remains the sharp rise in energy prices, which have increased by around +100% compared with the same period last year. Natural gas has even become more than +160% more expensive for German companies. Price developments at producer level are generally transmitted to consumer prices with a time lag.

Economic Indicators August 22

MEZ Country Indicator Last period
14:30 US Fed Chicago National Activity Index (July)  -0.19


Earnings Calender August 22

Country Company Period
US Zoom Video Communications Q2


LGT helps you make informed investment decisions

All about global economic and market trends at a glance

Subscribe to LGT's research newsletters

You can also follow us on Facebook or LinkedIn – or visit MAG/NET and discover interesting background articles. If you have questions, a consultant from the bank will be happy to help you.


Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi, E-Mail:
Source: LGT Bank (Switzerland) Ltd.


Risk Disclosure (Disclaimer)
This publication is an advertising material / marketing communication. This publication is intended only for your information purposes. It is not intended as an offer, solicitation of an offer, or public advertisement or recommendation to buy or sell any investment or other specific product. The publication addresses solely the recipient and may not be multiplied or published to third parties in electronic or any other form. The content of this publication has been developed by the staff of LGT and is based on sources of information we consider to be reliable. However, we cannot provide any confirmation or guarantee as to its correctness, completeness and up-to-date nature. The circumstances and principles to which the information contained in this publication relates may change at any time. Once published information is therefore not to be interpreted in a manner implying that since its publication no changes have taken place or that the information is still up to date. The information in this publication does not constitute an aid for decision-making in relation to financial, legal, tax or other matters of consultation, nor should any investment decisions or other decisions be made solely on the basis of this information. Advice from a qualified expert is recommended. Investors should be aware of the fact that the value of investments can decrease as well as increase. Therefore, a positive performance in the past is no reliable indicator of a positive performance in the future. The risk of exchange rate and foreign currency losses due to an unfavorable exchange rate development for the investor cannot be excluded. There is a risk that investors will not receive back the full amount they originally invested. Forecasts are not a reliable indicator of future performance. In the case of simulations the figures refer to simulated past performance and that past performance is not a reliable indicator of future performance.

The commissions and costs charged on the issue and redemption of units are charged individually to the investor and are therefore not reflected in the performance shown. We disclaim, without limitation, all liability for any losses or damages of any kind, whether direct, indirect or consequential nature that may be incurred through the use of this publication. This publication is not intended for persons subject to a legislation that prohibits its distribution or makes its distribution contingent upon an approval. Persons in whose possession this publication comes, as well as potential investors, must inform themselves in their home country, country of residence or country of domicile about the legal requirements and any tax consequences, foreign currency restrictions or controls and other aspects relevant to the decision to tender, acquire, hold, exchange, redeem or otherwise act in respect of such investments, obtain appropriate advice and comply with any restrictions. In line with internal guidelines, persons responsible for compiling this publication are free to buy, hold and sell the securities referred to in this publication. For any financial instruments mentioned, we will be happy to provide you with additional documents at any time and free of charge, such as a key information document pursuant to Art. 58 et seq. of the Financial Services Act, a prospectus pursuant to Art. 35 et seq. of the Financial Services Act or an equivalent foreign product information sheet, e.g. a basic information sheet pursuant to Regulation EU 1286/2014 for packaged investment products for retail investors and insurance investment products (PRIIPS KID).