The early August equity market shock may already feel like a distant memory, but some key market metrics have changed over the summer: the expected trajectory for the Fed is now much more dovish. Jay Powell in Jackson Hole chose not to stick to a cautious, gradualist approach, making it plain that the Fed has “ample” room for manoeuvre to act and will not necessarily wait for more obvious signs of a downturn to cut aggressively. Yet, while we know that the Fed is ready to support the economy decisively, it is still not obvious it will have to.
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