Jerome Powell’s keynote address in Jackson Hole was overtly — unequivocally, deliberately — dovish.

No other interpretations were possible, but on the off chance you were inclined to venture an alternative take on Powell’s prepared remarks, the dollar testified loudly to his intent.

As the figure below shows, the greenback was on track for its largest one-day decline since November 14, when a favorable CPI report called an end to the hiking cycle once and for all, notwithstanding the succession of worrying inflation prints which rattled the Fed’s confidence earlier this year.

On Bloomberg’s gauge, the dollar was down more than 1% headed into the weekend. That’s a very big move, and it drove the index near a YTD low.

As I’m always keen to remind readers — and if I recall correctly, I hijacked the language from SocGen’s Kit Juckes — the world’s a friendlier place when the dollar’s on the back foot. Which is to say risk is generally buoyant when the dollar’s down, and that was the case on Wall Street, where equities were higher into the US afternoon led by remarkable small-cap outpeformance.

There US curve bull-steepened pretty convincingly, with twos richer by nine or so basis points. There was rampant speculation headed into Powell’s speech that he’d underwhelm relative to aggressive market pricing for 100bps of cuts through year-end. Of course, Powell was never going to validate that pricing. It wasn’t about the specifics, it was about his tone and, again, his tone was unmistakably accommodative.

“Powell didn’t disappoint the doves,” BMO’s Ian Lyngen and Vail Hartman remarked. “As expected, the Chair was unwilling to commit to the size of the first cut or the pace of future adjustments [and] there was nothing within his comments that pointed toward the prudence of starting with 50bps [but] the emphasis on data dependence leaves that potential on the table as we look forward to August’s payroll and CPI reports.”

That’s the correct assessment, and the crucial nuance is that data dependence now just means the jobs market. It’d be too much to suggest the FOMC’s operating on a de facto single mandate vis-à-vis the NFP headline / jobless rate the same way the Committee was myopically (but justifiably) focused on CPI in 2022. But Powell made it clear — as did some of his colleagues this week — that policymakers are far more concerned about jobs than they are inflation at this juncture. As Lyngen quipped Friday, the Fed’s “labor data dependent.”

FF/2s remains deeply, deeply inverted (i.e., still screaming at the Fed to cut), and pricing for 2024 was back to tipping more than 100bps of cuts following Powell’s remarks. In short: The dovish front-end reset precipitated by the Sahm scare and the carry unwind is intact.

If you’re stocks — and we’re all stocks psychologically, bunch of degenerate, emotionally unstable gamblers that we are — what happens from here plainly depends on whether what we’ve seen lately from the US macro is a slowdown or the beginning of a recession. That’s so self-evident as to be barely worth mentioning, but that’s August Fridays for you.

For whatever it’s worth, BofA pointed out that after five of the last six Jackson Hole speeches, the S&P fell an average of 7.5% in the ensuing three months. “Who’s left to buy?” the bank wondered, noting that private clients’ equity allocation is at 62% (the highest in a decade outside of 2021) while S&P corporate cash piles are now just 8.8% of assets, the least since 2008.