Options Data Suggest US Stocks Unprepared for Hawkish Powell at Jackson Hole

Options data suggests that investors may be underestimating the potential market turbulence that could arise from Federal Reserve Chair Jerome Powell's upcoming address at the Jackson Hole economic symposium. Last year, a more hawkish-than-expected message from Powell led to a 3.4% drop in the S&P 500 on the day of his speech. Analysts believe that markets may be ill-prepared for a hawkish message this time, as recent strength in US economic data raises concerns about inflation. The S&P 500 has gained over 15% year-to-date, but rising Treasury yields threaten to dampen the appeal of stocks. While there is no guarantee of a starkly hawkish message, options data suggests that investors may not be fully prepared for potential market volatility.