In a week that will also see potentially revised Q2 GDP readings, a virtual Jackson Hole Symposium steps into the spotlight.
US
Last week the Federal Reserve disappointed investors with its meeting minutes from July’s get together.
The central bank warned that the covid-19 pandemic would ‘weigh heavily on economic activity, employment, and inflation in the near term’ as well as posing risks to the outlook ‘over the medium term’.
The FOMC went on to re-state the need for more fiscal stimulus from Congress, which is still yet to materialise, with Democrats wanting $3 trillion in aid and the Republicans only offering up a third of that.
Importantly, Powell and his pals claimed that new stimulus measures – specifically capping certain Treasury yields – were ‘not warranted in the current environment’. It was also vague on the future of its interest rates guidance, stating that providing ‘greater clarity’ on the requirements for it raising rates – be it outcome or calendar-based – would be appropriate at ‘some point’.
So, nothing too helpful. But, the minutes did hint that it was near the end of its longer-term monetary policy framework review focused on the elusive 2% inflation target, and the potential for a more relaxed approach that would see the Fed overshoot that target when needed to produce a yearly average closer to its objective.
That brings us to the Jackson Hole Symposium. Starting virtually on Thursday, the event will feature an address from Jerome Powell on Day 1, with speculation that he could cover the review ahead of September’s meeting. Investors will no doubt be paying close attention to his speech, as they try and ascertain what the central bank’s next steps will be.
Beyond Jackson Hole and its related headlines, the economy calendar sees the CB consumer confidence figure on Tuesday, followed by the durable goods orders on Wednesday.
Thursday then has the usual jobless claims reading – which was back above 1 million last week – joined by a second look at the Q2 GDP data. The advance figure came in at -32.9% at the annualised rate, so any downwards revision, however small, would be welcome.
Finally Friday has the Fed-favourite core PCE price index, alongside the personal spending, Chicago PMI and revised UoM consumer sentiment numbers.
UK
It is a painfully quiet week for the UK, at least from a data perspective, with nothing of much note on the economic calendar.
However, Friday sees an appearance from Bank of England chief Andrew Bailey at the online Jackson Hole Symposium. And just like with Jerome Powell, investors are going to be mightily interested in what Bailey has to say, especially on the topic of something like negative interest rates.
Eurozone
In terms of Eurozone data, the highlight is the final Q2 GDP reading out of Germany on Tuesday, with investors hoping for an improvement on the -10.1% preliminary estimate.
After that there’s not too much else until Friday, which sees German Gfk consumer climate data, as well as French consumer spending, inflation and Q2 GDP readings.
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