Jackson Hole is always a pivotal moment for the structural elements of monetary policy. None of us who are actively trading rates or global macro are making coinflip trades on tomorrow as if we know exactly what Warsh will say, or as if he will provide secret insight into the next FOMC meeting.
We are always in the process of updating how the range of probabilities is changing across multiple time horizons and how the constraints on each player act as anchors for those probabilities. These macro events function as clearing events where large players adjust hedges based on how their strategies are pricing fair value for an asset, as well as the vol positioning on that asset.
Some managers are adjusting exposure to meet benchmarking goals, vol targets, or their overall balance sheet, or they are simply running risk as discretionary traders. There are so many different players making decisions for so many different reasons, and everyone is trying to obtain whatever edge they can to squeeze P&L out of the market.
Differentiation will always be the defining element for those who generate alpha.
If you are following along with my active updates and the recent reports, you understand the structural elements of the new monetary regime we are moving into and how it directly connects to price action: see below for the initial context
