Warsh Restores Some Fed Credibility: 3-Minutes MLIV

• Powell's Jackson Hole speech 'repaired' the Fed's credibility regarding its commitment to the 2% inflation target.
• Markets are now pricing a 60% chance of a Fed rate hike in September.
• Higher yields, while disruptive in the short term, are seen as a positive sign of a hot economy and ultimately good for stocks.
• Concerns about Yen intervention are dismissed, as current USD-JPY movements are not considered 'disorderly'.

Mark Cudmore believes Federal Reserve Chair Jerome Powell's Jackson Hole speech successfully restored the Fed's inflation-fighting credibility, which was damaged in July. This has led to increased market expectations for a September rate hike (60% chance) and higher yields, which Cudmore sees as ultimately positive for stocks due to a hot economy. He dismisses concerns about supply-side inflation and Yen intervention.