This week we have several preliminary S&P PMI prints (Mon) which could shed more light on the health of the global economy. The US GDP revision (Thu) and the Fed’s favoured US PCE readings (Friday) will also garner interest.
The US Conference Board consumer confidence reading is due on Tuesday and the UN General debate kick-offs. US new home sales follow on Wednesday. US jobless claims, durable goods and GDP will be released on Thursday. China’s industrial profits will be keenly eyed by markets on Friday, and later we have the all-important US PCE data, and University of Michigan consumer sentiment releases.
We also have several central bank speakers, including the Fed’s Goolsbee, Bostic and Kashkari and the ECB’s Cipollone on Monday. On Thursday we’ll hear from ECB President Lagarde, and Fed Chair Powell, Williams and Yellen at the US Treasury Market Conference. On Friday, the ECB’s Lane and Cipollone speak at separate events and later we will hear from the Fed’s Collin and Kugler.
Last week was all about the FOMC meeting, where the Fed made a significant move to support the US economy by cutting its benchmark interest rate by 50bps to a range of 4.75% to 5%. This decision, voted 11-1 by the Federal Open Market Committee, marks an aggressive shift after holding rates at their highest level in two decades for over a year. The Fed projects further rate cuts in 2024-2026 and remains committed to supporting maximum employment and achieving 2% inflation. While unemployment forecasts have been adjusted upward, Fed Chair Powell expressed confidence in maintaining labour market strength alongside moderate growth and decreasing inflation.
In China, after a four-week slump, the benchmark Shanghai index rallied last week, buoyed by improved global risk sentiment following the Fed’s substantive 50bps rate cut. However, domestic investors remained wary due to the lack of a detailed plan to address China’s economic woes. Despite speculation of a potential 20bps cut in the Loan Prime Rate (LPR), the PBoC kept it unchanged, adding to investor uncertainty and pushing long-term bond yields lower. The National Development and Reform Commission (NDRC) emphasised the need to leverage government investment to stimulate social investment, approving nuclear power projects with private capital participation to foster sustainable development of private enterprises. This morning the PBoC lowered the 14-day reverse repo rate. Markets will keenly observe comments from the central bank’s governor Pan Gongsheng who, alongside two other financial regulators, will discuss financial support for economic development at a special press conference on Tuesday morning.
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