BlockBeats News, August 28th. The market's focus was on Fed Chair Powell's keynote speech at the Jackson Hole Global Central Bank Symposium. July's PCE inflation rose by 3.7% year-on-year, still significantly above the 2% target level. Several Fed officials have repeatedly emphasized that inflation is not yet fully under control, with some even suggesting that current interest rates are not restrictive enough, reigniting expectations of a September rate hike. Against this backdrop, Powell's real question to answer is not simply "hike or cut," but how the Fed will establish a clearer policy framework in response to inflation, employment, and economic growth.

Of greater concern, the pressure on the Fed is no longer just from inflation. The US Treasury recently expanded long-term bond buybacks in an attempt to lower long-term financing costs, but this may create tension with the Fed's direction of suppressing inflation through financial conditions. In Japan, the yen is again approaching the 160 level, and the US-Japan interest rate spread as well as the Bank of Japan's policy normalization continue to impact global fund flows. This means that even if Powell's stance leans hawkish, it may not directly lead to a rise in long-term bond yields. What the market needs to observe more is whether the Fed's credibility can reduce term premiums, allowing long-term US bonds to regain support.

Therefore, what the market will truly focus on later today is whether Powell can re-establish a credible anti-inflation logic. If he explicitly upholds the 2% inflation target and improves policy communication, there is a chance that long-term yields will be suppressed, thereby easing the valuation pressure on overvalued assets. Conversely, if his statements remain vague, the market may further price in fiscal and inflation risks through long-term US bond pricing.

In addition, with the Iran conflict showing no signs of cooling down completely and uncertainties remaining in the Strait of Hormuz shipping and energy supply, the truly important signal from Jackson Hole this time will be whether Powell can regain the market's trust in the Fed's continued dominance over inflation and financial conditions.