This Week 22-27 August 2022
It will be a busy week in the US with multiple data releases, including personal income and spending, durable goods orders, new home sales, and the second Q2 GDP estimate, taking center stage after Fed Chair Jerome Powell’s speech at the Jackson Hole symposium. Additionally, August flash PMIs for the US, UK, Australia, Germany, France, and Japan will be released. Finally, the monetary policy meetings in China, South Korea, and Indonesia will be actively watched by investors.
The Fed Chair’s address at the Fed’s annual economic symposium in Jackson Hole, Wyoming, will be the most important piece of news for markets to process during the forthcoming week. Powell is anticipated to provide further details about the Federal Reserve’s rate strategy and reiterate that a dovish move won’t likely occur until inflation reaches its 2% target. Personal income, spending, and consumption expenditures inflation, as well as August’s flash PMI reports, will be the focus of the data front. In addition, the second estimate of Q2 GDP, orders for durable goods, as well as pending and new home sales, will all be actively watched by investors. Mexico’s final Q2 GDP report will be eagerly followed elsewhere in America.
The European Central Bank (ECB) releases the minutes of its monetary policy meeting on Thursday. The Eurozone’s private sector economy is also anticipated to have shrunk the most since February of last year, according to flash Global S&P PMIs. The decline at the overall level of the Euro Area should be indicative of deteriorating conditions in the biggest economies, particularly in Germany, which is heavily reliant on natural gas. Consumer confidence in Europe’s biggest economy is expected to reach a new record low, while corporate morale is expected to drop to its lowest level in 26 months, according to consumer and business surveys for the Eurozone, Germany, France, and Italy.
Only the flash Global S&P PMIs and CBI gauges for industrial trends orders and distributive trades will be released, making up the UK’s sparse economic calendar. The expansion of the services sector likely slowed to its weakest point during the current 18-month sequence of growth, and growth in factory activity likely decreased to a 26-month low.
Investors in Australia are awaiting the August flash PMI numbers after last month’s data revealed that the country’s private sector expanded at its slowest rate in six months. Retail sales reports for the second quarter in New Zealand and consumer confidence numbers for August will provide additional details on the Kiwi economy.
After recent statistics indicated a slow recovery from rigorous Covid lockdowns, the People’s Bank of China is likely to lower the benchmark lending rates for corporate and mortgage loans in Asia. Following a largely stagnant result in the previous period, investors will also closely monitor the August PMI flash statistics for Japan. Business and consumer confidence data for August will be announced in South Korea, and markets anticipate a 25 bps hike from the Bank of Korea. In other parts of Asia, the Bank of Indonesia will meet to discuss monetary policy, and Malaysia will present its July CPI figures.