Jackson Hole symposium didn’t disappoint or rather it caused the expected volatility when Powell commented that “recent data has been mixed….the US economy continues to show underlying momentum”. He added “decision at the September meeting will depend on the totality of the incoming data and the evolving outlook,” but the crux of the commentary was “with inflation running far above 2 percent and the labor market extremely tight, estimates of longer-run neutral are not a place to stop or pause.”
The short version is that US rates are not coming down anytime soon and we may well see a larger than expected increase next month.
The above led to a 1000 pt drop in the Dow and a rise in US$ value and a reappraisal by the market which was getting comfortable with rates stabilising.
We do have US employment data for clues as to potential inflation pressures coming from wages and at the end of the week non-farm payrolls will be scrutinised to see if last month was a outlier – should we get another big number then that will fuel fears of rate rises and likely to see risk markets fall.
Crude rallied sharply on the week after looking very weak at the beginning after comments from Saudi energy Minister bin Salman suggested OPEC+ could cut “to counter the disconnect in the oil markets “ also flagged by him were concerns of Iran returning to the global market. Figures out of the US also showed a decline in crude inventories as record exports of oil showed a drawdown. WTI paused around $100 a barrel as the demand destruction wrought by high pricing is still a factor.
Metals showed a mixed response to Jackson hole and the oil markets with copper rising on hopes of a China economic recovery and a reduction in available stock in warehouses . Whereas platinum and palladium both struggled in tandem with the perception that the automakers will struggle in the event of a global slowdown. Additionally in interest rate rising markets assets that are non interest bearing will be pressured.
Date | Country | Figures | Expected | Previous |
Aug 30 | GER | CPI YY | 7.8% | 7.5% |
| USA | Consumer Confidence | 97.5 | 95.7 |
Aug 31 | GER | Unemployment rate | 5.5% | 5.4% |
| USA | ADP Employment | 200k | 128K |
| USA | Durable Goods Orders Mom Jul | 0.5% | 1.9% |
Sep 01 | USA | Initial Jobless Claims | 249K | 243K |
Sep 02 | USA | Non-farm payrolls | 285K | 528K |
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