The Jackson Hole Meeting and Market Scenarios

The Jackson Hole meeting, to be held in late August, is not a forum that directly determines the long-term direction of US monetary policy, but policymakers’ comments will provide clues for the market. At the 2026 meeting, Fed Chair Warsh’s speech is expected to be a major focus, and the market’s interpretation is likely to be put to the test.

In the background to the Japanese and US markets, AI- and semiconductor-related stocks continue to lead the market, with the rally potentially spreading to financial stocks. Three different market scenarios have been presented for the period following Jackson Hole, centered on a scenario that maintains the status quo, with probabilities of 45%, 30%, and 25%, respectively.

The outlook calls for different dollar-yen movements under each scenario. If the status quo is maintained and developments remain data-dependent, Japanese and US interest rates and the exchange rate could remain within their current ranges. By contrast, an increased indication of a September rate hike could push the dollar higher and the yen lower, while a dovish, employment-focused scenario is considered more likely to push the dollar lower and the yen higher.

For the Nikkei Stock Average, a new high in the ¥70,000–73,000 range has also been cited as a possibility, based on the current interest-rate environment and the impact of foreign exchange movements. On the other hand, a more hawkish outcome such as Scenario 2 could lead to further yen depreciation and potentially have complex effects on share prices.

As of 14 August, market probabilities put the chance of a September rate hike following the FOMC at 33%, compared with 67% for rates to remain unchanged. These probabilities could shift again depending on the outcome of the meeting.