Our short and sweet observations from the Jackson Hole opening remarks from Jay Powell. To us, hopes of an explicit pause have been postponed further down the road after this speech. A few highlights: 1) Data dependency is still the name of the game – NO promises for further meetings, meaning that consensus does not exist 2) Shelter costs are highlighted, which to me can be seen as a sign that Powell needs an excuse to hike further 3) The Fed is attentive to the risk of the economy running above trend still and monitors the housing rebound closely 4) The lack of spill-overs from the slide in job openings to the unemployment rate puzzles the Fed and they want more data. All in all the Fed is not commited to raising the rate from here and that is a slightly less aggressive message than the dot plot that included another 25bp hike in June. But between the lines especially three observations make the USD bull case interesting still: Shelter A lot of focus on shelter and a lot of focus on market rents. The Fed is much more focused on shelter than Powell admitted to through the spring. Ex shelter, inflation is already gone, so this is a sign that they will continue on a path towards slightly higher rates. Chart 1: Inflation is already gone ex shelter why Powell needs to focus on shelter again The economy may not be cooling as expected Powell noted signs of above […]