After a Jackson Hole set-up, September’s Federal Reserve meeting headlines this week’s economic calendar.
US: What does the Fed have in store this month?
The main takeaway from the online Jackson Hole symposium was that, from now on, the Federal Reserve is going to have a more relaxed approach to inflation. Specifically, it will allow the US CPI to overshoot the 2% target, in order to compensate for periods that fall below that long-held aim, hopefully creating an average of 2% across any given year. That’s a long way to say that interest rates a staying near zero for a while.
In terms of what the Fed has in store on Wednesday, a further articulation of its new inflation policy is to be expected. However, the markets might be disappointed by a lack of another stimulus injection – Jerome Powell and the rest of the FOMC are still waiting on Congress to hash out a bipartisan covid-19 spending plan. One suspects the more elderly members of the central bank shouldn’t hold their breath…
Before Wednesday’s meeting, there’s a busy Tuesday, with Empire State manufacturing index, import prices, industrial production and capacity utilization rate readings. On Wednesday itself, meanwhile, the get together is preceded by the latest retail sales figures. Thursday then sees the Philly Fed manufacturing index join the usual jobless claims – hoping to stay under 1 million for a 3rd week in a row – while Friday has the most recent current account and consumer sentiment numbers.
Elsewhere a buffet of Chinese data could inform how the markets behave pre-Fed. Industrial production, fixed asset investment and the unemployment rate are all released in the early hours of Tuesday morning. The most important number, however, will likely be the retail sales reading. It has remained negative for the last 6-months, despite forecasts stating otherwise for June and July. Will August’s number finally see China’s retail sector swing positive? Investors are certainly hoping so.
There are also still question marks over investors’ feelings on the US tech sector, which has had a rollercoaster start to September after a summer blockbuster.
UK: Bank of England to meet
Like in the US, the UK’s week is built around a central bank meeting – here, the Bank of England’s latest chinwag on Thursday. Investors will be on the look for any signs from Andrew Bailey and his MPC buddies that fresh action could be on its way before the year is out.
In the run up to Thursday’s meeting, there’s the UK jobs report on Tuesday, inflation, HPI and PPI on Wednesday, and the retail sales reading for August on Friday.
As for the pound, it will be fretfully watching out for the latest Brexit developments as Britain edges ever closer to a no deal departure.
There’s plenty Eurozone-specific for continental investors to dig into, from Monday’s industrial production data, to ZEW economic readings on Tuesday, trade balance on Wednesday, inflation on Thursday and current around figures on Friday.
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