Last week we anticipated that aggressive expectations on central bank rate hikes would likely pressure stocks, which they did all week. The key focus of this week is all about the communication from Jerome Powell at the Jackson Hole Symposium. Will he undo July’s Fed statement and affirm the Fed’s unwavering commitment to tackle surging inflation? Or will Jerome Powell take a more dovish stance and help lift US stocks higher again? Heading into the meeting there is a hawkish expectation, so if Powell does not deliver that watch for a retreat in the USD, US10Y, and a lift for gold and silver. All eyes on Powell!

Other key events from the past week

  • GBP: Manufacturing miss, Aug 23: The UK Manufacturing PMI print showed new orders slowing to levels seen in May 2020. This adds weight to the BoE projection for a Q4 2022 slowdown. The GBP is struggling. See here for more detail.
  • USD: Jackson Hole, Aug 26: Investors are going to be looking over the detail of Jerome Powell’s speech on Friday to see how hawkish the Federal Reserve will be in the face of growing evidence of a US slowdown. Expect volatility.
  • USD: Manufacturing miss, Aug 23: The US Global Manufacturing PMI flash print for August showed US businesses shrinking for the 2nd month in a row. This reflects overall lower demand and raises more concerns about the US economy.

Key events for the coming week

  • CN50: China’s PMIs, Aug 31: Next week traders will be looking at China’s PMI data to see if there is a further acceleration in China’s slowdown. A very strong print could help lift the growing pressure on China’s major stock indexes.
  • Will gold’s falls continue? Gold’s strong seasonal pattern is coming to an end.
  • USD: US Labour, Sep 02: US Jobs data has been giving the Fed confidence to keep hiking rates. If we see a headline print below minimum expectations of 230K that will concern investors that the US economy is slowing down.

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