The softest of soft landings
Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com
THE SOFTEST OF SOFT LANDINGS
A look at the day ahead in European and global markets from Wayne Cole.
Markets kicked off the week with a day of consolidation after their best week of the year, on expectations of a softer than soft landing for the U.S. economy - or no landing at all given many analysts expect it to keep growing between 2% and 3%.
S&P 500 futures ESc1 and Nasdaq futures NQc1 are ahead by 0.2% or so while the Nikkei .N225 is flat, having rallied almost 9% last week. The euro is holding above $1.1000 EUR=EBS and sterling hit its highest in a month at $1.2953 GBP=.
Federal Reserve members Mary Daly and Austan Goolsbee were out over the weekend to flag the possibility of easing in September, while minutes due on Wednesday for the last policy meeting should underline the dovish outlook.
Futures are 100% priced for a quarter-point cut, and 26% for 50 basis points, with much likely depending on whether the next U.S. payrolls report shows the bounce that many anticipate.
On a cautionary note, Goldman Sachs noted the annual re-analysis of payrolls is due on Wednesday and could show a downward revision in the range of 600,000 to 1 million jobs, although they argue this would overstate the weakness of the labour market.
Fed Chair Jerome Powell caps the week with his Jackson Hole speech on Friday and markets are clearly priced for a dovish outlook, although not one that sanctions a half-point easing.
Markets are likewise fully priced for a Riksbank rate cut on Tuesday, with the only debate being whether they go by 25 or 50 basis points.
Japan's consumer price report could revive talk of a Bank of Japan hike, which had all but evaporated since the Nikkei's recent swoon.
Markets have just 2 basis points of Japan tightening priced in for October, although some analysts are still calling for a rise of 25 basis points, to 0.5%. 0#BOJWATCH
On the U.S. politics front, the Democratic convention kicks off on Monday with betting site PredictIt showing Vice President Kamala Harris at 58 cents compared with 45 cents for Donald Trump, a complete reversal from where it was before President Joe Biden dropped out.
Key developments that could influence markets on Monday:
- Riksbank starts two-day monetary policy meeting
- Finland's central bank governor and ECB governing council member Olli Rehn speaks in New York
- Federal Reserve Board Governor Christopher Waller speaks
*****
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.