This week’s key events include quarterly earnings from major US retailers, UK inflation, and the Jackson Hole Symposium (Thu-Fri). We also have US housing starts on Tuesday. Next eurozone and UK CPI, the FOMC meeting notes will garner interest on Wednesday. As will the ECB’s President Lagarde speech at the World Economic Forum. We will also hear from the Fed’s Waller and Bostic (and again on Thursday). Preliminary Manufacturing PMI prints for the eurozone, UK, and US are due on Thursday, and from the US we also have initial jobless claims, the Conf. Board leading index, existing home sales and Walmart earnings. Germany GDP, and UK retail sales feature on Friday. The main event will be Fed Chair Powell’s keynote address at Jackson Hole.
A few key events drove markets last week. Delayed US tariffs on China supported sentiment, while mixed US inflation figures and solid retail sales data raised concerns that the Fed may not cut interest rates as soon as expected. US Treasury 10-year yields rose 4bps to 4.32%, while the S&P Index rose 0.94%. Meanwhile, the DXY Index fell 0.33%, and Brent crude dropped 1.11% to $65.85pb.
Last week’s US economic data presented a complex picture, with the PPI unexpectedly surging, signalling rising costs for businesses. However, this contrasted with a more benign CPI and robust retail sales, which demonstrated resilient consumer spending despite wholesale price pressures. While the futures market anticipates a 25bp rate cut at the September FOMC meeting, the recent uptick in core CPI above 3% and potential inflationary effects from tariffs cast doubt on whether Powell will deliver a dovish surprise, particularly at this Friday’s Jackson Hole speech. The week ended with a fall in the Uni. of Michigan sentiment prints and pick-up in inflation expectations. Elsewhere, economic data from China missed expectations. Industrial production grew at its slowest pace since November, and retail sales and fixed-asset investment also showed weaker-than-anticipated growth. These figures suggest that the Chinese economy is grappling with a combination of lingering issues in its property market, weak domestic demand, and external headwinds from ongoing trade tensions. The recent extension of a trade truce with the US has, however, provided a more stable backdrop, with markets and investors watching for further policy signals to boost confidence.
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