Here are the top five things you need to know in financial markets on Thursday, August 25:
1. Jackson Hole Economic Symposium kicks off
The widely anticipated Economic Symposium in Jackson Hole on the topic “Designing Resilient Monetary Policy Frameworks for the Future" kicks off on Thursday with a reception and opening dinner.
Though the full agenda for the three-day gathering of central bankers and leading economists will not be published until 00:00AM GMT, or 20:00ET, the Federal Reserve (Fed) confirmed that U.S. central bank chief Janet Yellen will deliver a speech titled “The Federal Reserve's Monetary Policy Toolkit” on Friday at 14:00GMT, or 10:00AM ET.
Markets were anxious to see if Yellen would give hints on the timing of the next move forward in the normalization of U.S. monetary policy.
The odds for a rate hike at the September meeting had been increasing on the back of recent hawkish comments from Fed officials and are currently putting the probability at 21%, compared to last week’s 9%, according to Investing.com’s Fed Rate Monitor Tool.
2. Durable goods orders expected to rebound, service output to pick up
Durable goods orders were expected to rebound in July after the previous month’s slump. The data will be released at 12:30GMT, or 8:30AM ET.
At the same time, markets will see if the weekly jobless claims inch forward as forecast.
Later at 13:45GMT, or 9:45AM ET, Markit will publish its preliminary services purchasing managers’ index (PMI) for August. Activity in the U.S. service sector was expected to rise to a four-month high.
3. Oil rebounds from sharp selloff
West Texas and Brent rebounded on Thursday after a surprise build in U.S. inventories in the prior session drove prices down 2.8% and 1.8%, respectively.
OPEC is set to hold an informal meeting to again discuss an output freeze late next month and hopes for an agreement sent oil soaring nearly 25% in recent weeks.
However, analysts and traders remain skeptical the meeting would result in a coherent effort to reduce the global glut with many experts dismissing the possibility that OPEC could freeze production, let alone cut output.
U.S. crude oil futures gained 0.49% to $47.00 at 9:52AM GMT, or 5:52AM ET, while Brent oil rose 0.45% to $49.27.
4. Global stocks wilt ahead of Jackson Hole gathering
Asian stocks were mostly lower on Thursday as investors waited with baited breath for Yellen’s speech. Chinese stocks were pressured by reports that the country’s central bank was discussing liquidity conditions with lenders and the Nikkei 225 moved lower as a dollar rally ran out of steam.
European stocks were also lower on cautious trade ahead of Jackson Hole.
Meanwhile, U.S. futures pointed to a slightly lower open on Thursday in a continuation of losses registered in the prior session. At 9:53AM GMT, or 5:53AM ET, the blue-chip Dow futures fell 23 points, or 0.12%, S&P 500 futures lost 2 points, or 0.10%, while the Nasdaq 100 futures traded down 7 points, or 0.15%.
5. PBOC urges Chinese banks to spread out tenor on loans
The People's Bank of China (PBOC) met with major banks on Wednesday to discuss management of liquidity in Chinese money markets amid rising speculation over whether Beijing would continue its monetary policy easing or not, according to banking sources cited by Reuters on Thursday.
The Chinese central bank appeared to be concerned that financial institutions were using overnight lending to fund speculative bets in the bond market.