Market Minute 8-22-25- All Eyes on Powell as Rate Debate Percolates

Equities are modestly higher after spending the week selling off. Crude oil is flat along with Treasuries and the dollar. Gold and silver are down a bit, while Bitcoin is marking time around $112,000.

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Stocks have been sliding this week, with the S&P 500 Index (^SPX) notching its fifth consecutive decline on Thursday. While that hasn’t happened since January, the damage has been modest overall – with the benchmark index only trading 1.5% off its all-time high. Investors have been rotating out of previous winners and into previous laggards…while hesitating to make big bets ahead of today’s speech by Federal Reserve Chairman Jay Powell.

Powell’s comments at the Fed’s annual Jackson Hole, Wyoming confab could provide important guidance about what the Fed will do at its three remaining policy meetings in 2025. Those will be held Sept. 16-17, Oct. 28-29, and Dec. 9-10. Other Fed speakers have already weighed in from Wyoming, with their comments indicating the Fed remains split on whether to cut in September or not.

TLT, IEF, SHY (YTD % Change)chart

Data by YCharts

Through late August, long-term Treasury bonds have underperformed shorter-term Treasury notes. The iShares 1-3 Year Treasury Bond ETF (SHY) has generated a total return of 3.1%, while the iShares 7-10 Year Treasury Bond ETF (IEF) has returned 5.3%. The iShares 20+ Year Treasury Bond ETF (TLT) is up just 1.4%.

Nvidia Corp. (NVDA) is reportedly dialing back production of its less-advanced H20 chip. The culprit: Slumping demand in China, where the government is urging buyers to use domestically produced alternatives from Huawei Technologies Co. and Cambricon Technologies Corp. It’s all part of the ongoing US-China tensions, which involve disagreements on trade, tariffs, government surveillance, and US dominance in the tech industry.

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Finally, two Canadian energy powerhouses could soon be tying the knot, with oil and gas producer Cenovus Energy Inc. (CVE) offering $5.7 billion to buy MEG Energy Corp. (MEGEF). MEG had previously rejected a separate offer in June, but this one has been approved by MEG’s board. The cash-and-stock deal would create one of the largest petroleum producers in Alberta’s oil sands region, with combined output of around 720,000 barrels per day.

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