The speech of the president of the FED, Jerome Powell, on Friday in the Jackson Hole Economic Symposium of this year, the risk of inflation to increase inflation against a fragile labor market, and the political calendar now raises the probabilities that his eventual successor is less cautious in rates.
Powell’s message was deliberately sober.
He said that “the effects of tariffs on consumer prices are now clearly visible” and will continue to leak with an uncertain moment. The PCE inflation of the headlines extended 2.6% in July and Core 2.9%, with the prices of goods that are reduced from last year decreases to profits.
He framed the labor market as a “curious balance type”, with payroll growth that slows up approximately 35,000 per month in recent months from 168,000 in 2024, while unemployment is at 4.2%.
Immigration has cooled, the growth of the workforce has softened and the rhythm of the contracting of equilibrium necessary to maintain stable unemployment is lower, which masks fragility. Net -net said that short-term risks are “upward inclined” for inflation and “disadvantage” for employment, a mixture that defends attention instead of a rapid relaxation cycle.
It also restores the frame.
The FED reduced the “average inflation orientation” of 2020, returned to the flexible orientation of 2% and clarified that employment can work above the maximum estimated levels without automatically forcing increases, but not at the expense of price stability.
He stressed: “We will not allow a unique increase in the price level to become a continuous inflation problem.” The policy “is not in a pre -established course”, and although September is live, the bar for a quick series of cuts seems high unless the data weakens more.
That macro posture lands within a new political backdrop that markets cannot ignore. Powell’s current term ends on May 15, 2026, and has said he intends to serve him. Donald Trump has attacked Powell and demands lower rates, but legal protections mean that a president cannot eliminate a governor of the Fed or preside over political disagreements.
Trump can announce its favorite replacement for Powell long before 2026, giving markets time to set the price in a chair that is probably more misleading and tolerant of growth risk than Powell. That imminent change matters how the Ram path evolves around 2026, even if the following FOMC meetings remain dependent on the data.
The political tension appeared again on Friday when Trump publicly threatened to set fire to the governor Lisa Cook for alleged mortgage fraud if she did not give up. Like Powell, governors have strong protections and can only be eliminated by cause. Markets read this less as a threat of immediate governance and more as a sign that the pressure of the Fed personnel could grow, increasing the uncertainty around future leadership and communication.
What this means for us Treasurys
The speech points to a slower and less deep route in the fourth quarter of 2025 unless inflation retires convincingly. The tariff transfer maintains the prices of sticky goods, while the services are gradually facilitated, which argues for the yields of the front-ends that remain firm and the curve that is only weakened if the growth data is weakened.
A future and less cautious chair could compress the term premiums later by pointing out a faster path to neutral, but between now and then the volatility of the speed is maintained and the demonstrations are directed by data instead of being led by policies.
What this means for US actions
A careful Fed supports the soft earth narrative, but not a rapid multiple expansion. The growth of the profits can transport reference points, but the growth stocks sensitive to the rates remain vulnerable to the upward surprises in the inflation or the salaries that push the cuts beyond.
If the markets begin to set the price of a chair that is more willing to relieve in a warm inflation backdrop, cyclic and small caps could capture an offer, but the risk of credibility increases if inflation expectations move. For now, the actions exchange the gaps between each inflation impression, payroll update and fed communication.
What this means for crypto
Crypto lives at the intersection of liquidity and the history of inflation. A longer posture to speculate flows to Altcoins and actions related to cryptography such as miners, exchanges and companies with treasury because financing costs are maintained high and risk budgets.
At the same time, sustained inflation above the target keeps the narrative of hard assets and supports the demand for assets with scarcity or purpose of settlement alive. This combination favors bitcoin and tokens of great cash capitalization with the cash flow during the long -term projects and story narration until the Fed indicates more conviction about cuts.
If a successor president in 2026 is perceived as less cautious, the liquidity cycle could become more decisively in favor of Crypto, but the price to get there is more volatility as merchants harm the leadership, the confirmation of the Senate and the data.
Why the road matters more than the first cut
Even if the Fed cuts the rates in September, since now it seems very likely, Powell’s frame implies a glideepath tracked by inflation expectations, not market hope. The transmission of the house is silenced by the mortgage block, so small cuts may not unlock growth quickly.
Global flexibility elsewhere adds a wind of marginal liquidity tail, however, the road and premiums of the dollar terms depend on whether inflation in the United States behaves like a unique tariff shock or a more sticky process. In the first case, the breadth of cryptography can improve and the risk can turn beyond Bellwethers; In the latter, leadership remains narrow and manifestations fade into hot data.
The wild card 2026
The markets must now set a two -stage regime: Powell’s cautious posture based on data until 2025, then the possibility of a president chosen by Trump who is less patient with inflation over the objective if the growth weakens, or more willing to accept the risk of inflation to support the activity. The restrictions of appointment and confirmation of the Senate are real, so a wholesale pivot is not automatic, but the distribution of the results is expanded.
For treasurys that can mean thicker term premiums until leadership is known; For actions it can mean rotation and rotation of factors; For cryptography, it can mean a stronger medium -term liquidity history together with the shortest short term trade.
End
Powell requested time and data as tariffs raise prices and the job engine is reduced. The markets now have to negotiate that caution until the fourth quarter of 2025, while discounting the realistic possibility of a less cautious fed chair in 2026.
That two steps makes next year a patience test in Treasurys, a routine in the actions and a criptography volatility trade, with the payment determined in case inflation demonstrates transitory enough to be fed to cut, or persistent enough for the next one to choose.
