Fed Chair Powell's hawkish Jackson Hole speech upended stocks in August, but today's inflation picture is far less worrying.

Federal Reserve Chairman Jerome Powell is set to deliver a key policy speech Wednesday in Washington in what could be the last major address from a central bank official prior to its December rate-setting meeting.

Powell is slated to speak at 1:30 pm Eastern time at the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution on the outlook for the economy, inflation, and the changing labor market, with a question-and-answer session from the audience to follow.

Powell broke from the agreed Fed statement earlier this month, following the central bank's fourth consecutive 75 basis point rate hike, by insisting to reporters that it was "too soon" to consider a pause in rate hikes despite the Open Market Committee's clear indication that smaller increases, with an eye towards peak rates, would likely be required over the coming months.

Minutes of the Fed's November rate decision, in fact, showed that "a substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate" in order to "better allow the Committee to assess progress toward its goals of maximum employment and price stability."

The U.S. dollar index, which tracks the greenback against a basket of its global currency peers, is on pace for its biggest monthly decline in ten years as investors re-set assumptions for Fed rate hikes following the softer-than-expected October CPI reading.

The CME Group's FedWatch, in fact, now suggests a 67.5% chance of a 50 basis point rate hike next month, which would take the benchmark Fed Funds rate to a range of between 4.25% and 4.5%, with the bulk of expectations pointing to a peak Fed Funds rate of between 5% and 5.25% by early spring before the central bank starts to pause its rate hiking cycle. 

Full article: https://www.thestreet.com/markets/powell-speech-preview-markets-seek-dovish-tilt-as-rate-bets-fade

Fed Chair Jerome Powell is set to deliver a key policy speech at the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution later today. The S&P 500 (SPX) closed down more than 3% on the day after Chair Powell's speech in Jackson Hole in August. How do you think the market will react this time?