Here's what to expect from Fed Chair Yellen's speech at Jackson Hole

The speech is being billed by Wall Street as must-see TV, but Federal Reserve chair Janet Yellen's address Friday may not offer many — or any— surprises.

Yellen is unlikely to shock markets by signaling an interest rate hike is coming next month when she speaks Friday at a high-profile symposium. However, she is expected to start preparing the market and complacent investors for an eventual rise in borrowing costs.

Yellen’s speech at 10 a.m. ET Friday in Jackson Hole, Wyo., is the big event Wall Street has been waiting for.

Yellen is expected to outline what “tools the Fed has to fight the next battle, the next crisis,” as it comes to grips with the new world of slow growth and low rates, says Gene Tannuzzo, senior fixed income portfolio manager at Columbia Threadneedle Investments.

But market pros will likely focus on comments from Yellen that shed light on the Fed’s near-term plan for interest rates. The Fed has left rates steady all year after boosting rates off zero back in December for the first time in nearly a decade.

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But in recent weeks a few members of the Fed, citing a strong labor market and other upbeat economic signals, have come out in favor of a rate hike sooner rather than later, perhaps as early as the Fed’s Sept. 20-21 meeting. The problem is Wall Street doesn’t expect a rate hike until December at the earliest, putting their portfolios at risk if Yellen shocks the market by turning hawkish and signals the Fed's getting ready to move.

A change in messaging from Yellen is not expected, given that the Fed won’t get another look at the labor market – which rebounded strongly in June and July – until the August jobs report is released in early September. Inflation also remains tame, giving the Fed another excuse to wait.

“There won’t be any monumental type of revelation at Jackson Hole,” says Jamie Cox, managing partner at Harris Financial Group. “Yellen is not the type of person who uses this type of speech to make large policy announcements.”

What Yellen is more likely to do, however, is “gently lead us toward a coming hike,” perhaps in December, says Luke Bartholomew, investment manager at Aberdeen Asset Management.

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Yellen wants to avoid market turbulence, so a surprise policy shift toward a sooner-than-expected rate hike is unlikely.

“They want to avoid the shock factor,” says Tim Hopper, chief economist at TIAA Global Asset Management. But, at the same time, they need to change the market's view that they are never going to pull the trigger and hike rates, he adds.

Still, a negative market-moving event would be if Yellen “alludes to a rate increase in September or December in a definitive way,” backing the talk of fellow Fed members that are viewed as “hawkish,” or rate-hike friendly, says Krishna Memani, chief investment officer at Oppenheimer Funds.

“The market is not set up for a September rate hike,” Memani says.