Analyst
A relatively quiet week in economic data lies ahead with only significant manufacturing data being released in the middle of the week. Investors await the Jackson Hole Summit on Friday (Aug 25), for statements from Fed Chair Jerome Powell and ECB President Christine Lagarde regarding economic health and potential rate policy decisions.
European gas prices spike with a looming Australian strike that could disrupt up to 10% of global liquefied natural gas exports. Oil prices rise for three consecutive days, responding to a strengthening physical market and stagnation in the USD's climb, despite demand concerns.
European equities, particularly energy firms such as Total Energies, Shell, and BP, see a boost in share prices due to rising crude oil and gas prices affected by the potential strike.
US futures are holding steady as trading volumes remain below average.
Asian stocks experience declines. The Hang Seng Index sharply by 2% and mainland China stocks fall 1.4%. Confusion arises due to China's mixed responses to its property slump; especially after the nation's lenders adjusted their one-year loan prime rate by only 10 basis-points, contrary to the anticipated 15 basis-points.
Bond yields surge, leading the US 10-year's trajectory towards levels unseen since 2007. This follows a sell-off in the Treasury market this month. Investor anxieties increase due to concerns of continued inflation and upcoming policy tightening, especially with the impending annual Jackson Hole gathering of central bankers.
Fed Chair Jerome Powell is predicted to adopt a balanced stance at the Jackson Hole event, suggesting a possible end to the rate hike cycle but emphasizing the necessity to maintain raised rates.
Initial optimism in equity markets, characterized by expectations of a soft landing for the resilient US economy, gets challenged by recent bond yield spikes, assertive central banker remarks, and a worsening outlook in China.
Oil prices remain stable; Brent crude stands near $85/barrel, while WTI trades in the range $80.5 - $81/barrel. Gold slightly rises back near $1,900 per ounce ahead of the Jackson Hole summit. Commodity prices benefit from the USD rally making a pause - but remain under pressure from elevated US Treasury yields and concerns about Chinese demand.
Key events today:
PPI - 06:00 UTC+0 (released)
Here are some key events this week:
Tuesday:
US: Existing home sales
Chicago Fed: Speech by Austan Goolsbee
Wednesday:
Eurozone: S&P Global Services & Manufacturing PMI, Consumer confidence
UK: S&P Global / CIPS UK Manufacturing PMI
US: New home sales, S&P Global Manufacturing PMI
Thursday:
US: Initial jobless claims, Durable goods
Kansas City Fed: Start of annual economic policy symposium in Jackson Hole
Friday:
Japan: Tokyo CPI
Germany: IFO Business Climate
US: University of Michigan consumer sentiment
Jackson Hole Conference: Speeches by Fed Chair Jerome Powell and ECB President Christine Lagarde
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