The Federal Reserve’s efforts to reverse its easy policy will be a dominant theme for markets in the week ahead, as central bankers gather in Jackson Hole, Wyo.

The central bankers may even look relaxed against the backdrop of the Grand Tetons in the crisp late August air. But they will be under pressure to gently steer toward less policy support, without creating a market tantrum.

Federal Reserve officials, in numerous recent speeches and interviews, have already managed to speed up expectations for when they could begin to slowly pare back their $120 billion a month in bond purchases. More of that talk is expected at their annual symposium, which begins Thursday.

The Fed chairman’s speech is typically the highlight of that annual event, and various Fed chairs have used Jackson Hole to send important messages. The question is whether Jerome Powell will channel that speech Friday morning to provide more details on how the Fed could begin to unwind its bond buying program, and even whether he is personally ready to embrace it.

“We’re not expecting a big policy reveal at this meeting,” said Mark Cabana, head of U.S. short strategy at Bank of America. “I don’t think Powell wants to front run the [September] meeting, given the myriad of voices that are out there. I don’t think this is the time when Powell really wants to make a splash.”

Besides the Fed, there are a few economic reports in the coming week. Existing home sales are released Monday; new home sales Tuesday and durable goods on Wednesday. On Friday, there is personal consumption expenditures data and the inflation index, that is closely watched by the Fed.

Earnings are also expected from Best Buy and Nordstrom Tuesday, Salesforce.com Wednesday and HP and Dell Technologies on Thursday, among others.

Fed and markets

But it will be the Fed that will matters most, as investors will also keep an eye on how the economy is responding to the spread of the Covid delta variant. Stocks were lower in the past week, with the S&P 500 down 0.6%.

There could be some volatility around the Fed’s symposium, after the the release of minutes from the last official meeting rattled investors. The minutes described most members of the Federal Open Market Committee as being ready to taper this year if the economy is strong enough. Cabana said he changed his view after that release and now expects the Fed to begin paring back purchases in November, rather than January.

“We just think this signal in communications is pretty clear,” he said. “For now, it’s safe to say they are wanting to start later this year and we think the data will allow them to do that.”

As for Powell, “he’s not going to announce taper. What we anticipate is that he’s going to give a live speech that talks about a lot of the progress that has been made since the start of Covid, and there’s a lot of it,” said Cabana. He said Powell could reiterate that the Fed will be data dependent in its decision to taper, and that many Fed officials believe it could make sufficient progress toward that goal later this year.

The minutes caused hiccups in markets as investors reacted to the idea that the Fed will take its first steps toward peeling away the extraordinary amount of policy it used to fight the impact of the pandemic. Tapering the bond program could take months, but once it ends it could herald the onset of rate hikes.

Diane Swonk, chief economist at Grant Thornton, said Powell should provide a road map for how the Fed will taper, but with the caveat of being able to step back if Covid is more serious than expected.

“The asset purchases were initially to stabilize financial conditions…There’s clearly a consensus building stronger than it even was at the last meeting in July, given how [Fed officials] have been speaking out since then,” said Swonk. “They want to wind down asset purchases. As they wind them down, they’re not hitting the brakes. They’re only lifting their foot off the accelerator. The difference is important for [Powell] to lay out at Jackson Hole.”

Swonk said the Fed needs to provide a road map for tapering, but also with off ramps in the event that Covid is worse than expected.

“To avoid this becoming a tantrum and avoid financial markets seizing up again, he wants to get the messaging out and the context of it, as much as possible,” Swonk said. “If this becomes a disorderly reaction and things are melting down, they would have to pivot. Where we’re at is these types of purchases are no longer justified and maybe detrimental in terms of how much liquidity they’re putting into financial markets when its no longer needed.”

Week ahead calendar

Monday

Earnings: JD.com, Palo Alto Networks, Madison Square Garden

10:00 a.m. Existing home sales

Tuesday

Earnings: Best Buy, Bank of Montreal, Nordstrom, Intuit, Urban Outfitters, Toll Brothers, Advanced Auto Parts, Medtronic

10:00 a.m. New home sales

Wednesday

Earnings: Salesforce.com, Royal Bank of Canada, Snowflake, Box, Autodesk, Express, Dick’s Sporting Goods, Shoe Carnival, NetApp, Splunk, Pure Storage

8:30 a.m. Durable goods

Thursday

Earnings: HP, Dell, Gap, Abercrombie and Fitch, Dollar General, Dollar Tree, Hain’s Celestial, Ulta Beauty, Peloton, Workday, VMWare, Ollie’s Bargain, Marvell, Toronto-Dominion, Sanderson Farms

8:30 a.m. Jobless claims

8:30 a.m. Q2 GDP

Friday

Earnings: Big Lots

8:30 a.m. Personal income and spending

8:30 a.m. Advanced trade

10:00 a.m. Consumer spending (final August)