Weekly Market Outlook (26-30 August)

Upcoming Events:

• Monday: PBoC MLF, German IFO, US Durable Goods Orders.
• Tuesday: Consumer confidence in the United States.
• Wednesday:Australia Monthly CPI and Nvidia Earnings.
• ThursdayUS GDP Q2:^{Second abbreviation} US unemployment claims estimates.
• FridayTokyo CPI, Japan Retail Sales, Eurozone Spot CPI and Unemployment Rate, Canada GDP, US Personal Spending.

Tuesday

The US Consumer Confidence Index is expected to come in at 100.1 versus 100.3 previously. The latest report saw the Current Situation Index, which is generally considered
Leading indicator As for the unemployment rate, it fell to its lowest level in three years.

“Confidence increased in July, but not enough to break out of the narrow range that has prevailed over the past two years,” said Dana M. Peterson, chief economist at The Conference Board. “Compared to last month, Consumers were less pessimistic about the future.“.”

Expectations for future income have improved slightly, but Consumers remained generally negative about future business and employment conditions.At the same time, consumers were less optimistic about current business and employment conditions.”

“Smaller monthly job additions are likely to impact consumers’ assessment of current job availability: while still very strong, Consumers’ assessment of the current state of the labor market fell to its lowest level since March 2021.“

Wednesday

Australian monthly CPI is forecast to come in at 3.4% YoY versus 3.8% previously. The RBA continues to maintain a hawkish stance, while the market continues to expect at least one interest rate cut by the end of the year.

Thursday

US unemployment claims remain one of the most important data to follow each week, as they are a more accurate indicator of the state of the labor market.

Initial claims remain within the 200K to 260K range that has been established since 2022, while continuing claims have been steadily rising. Indicating that layoffs are not accelerating and remain at low levels while hiring is more subdued..

Initial claims this week are expected to come in at 234,000 versus 232,000 previously, while continuing claims are expected to come in at 1,870,000 versus 1,863,000 previously.

Friday

Tokyo core CPI is expected to come in at 2.2% y/y versus 2.2% previously. As a reminder, the economic indicators the BOJ focuses on include wages, inflation, service prices and the GDP gap. Tokyo CPI is seen as a leading indicator of the national CPI, so it is more important to the overall market than the national figure.

Moreover, Bank of Japan Governor Ueda left the door open to raising interest rates, saying that recent market moves will not change their stance if price expectations materialize. He added that short-term interest rates in Japan are still very low, so if the economy is doing well, the Bank of Japan will raise interest rates to levels that are considered neutral for the economy.

Eurozone CPI is expected to come in at 2.2% y/y versus 2.6% previously, while core CPI is expected at 2.8% y/y versus 2.9% previously. This report will not change anything for the European Central Bank as the central bank intends to cut interest rates by 25 basis points in September.

US PCE is expected to come in at 2.5% YoY vs. 2.5% previously, while the MoM figure is expected at 0.2% vs. 0.1% previously. Core PCE is expected at 2.7% YoY vs. 2.6% previously, while the MoM figure is expected at 0.2% vs. 0.2% previously. Forecasters can reliably estimate PCE once the CPI and PPI are released, so the market already knows what to expect..

This report will not change anything for the Fed as it will cut interest rates in September no matter what.
The Fed is now focused on the labor market, and the upcoming nonfarm payrolls report will decide whether the FOMC will cut interest rates by 25 or 50 basis points. In the next decision on 18^D From September.