Market movers today
The Jackson Hole symposium started last night under the headline ‘Changing Market Structure and Implication s for Monetary Policy’. Fed Governor Jerome Powell will speak today on ‘Monetary Policy in a Changing Economy’ at 16.00 CEST. We do not expect any change to the recent message from the Fed minutes and his semi-annual testimony in July. The Fed is on a continued track of gradual rate hikes as long as the recovery continues. The market will watch for any comments on the yield curve and risks from the US-China trade war in his speech.
On the data front, US durable goods orders will give more input on US investment spending, which will be interesting in order to gauge potential impact of the trade war. So far, the impact has been limited and 80% of US companies in a survey recently said the trade war would not affect their investment plans.
In the Scandies, it is time for Norwegian unemployment (LFS) and Swedish PPI (see page 2).
Selected market news
The trade negotiations between the US and China this week have not managed to deliver any progress. Markets are a bit on the limp side in terms of the out look as indications from the Chinese side indicate that talks have been constructive and that communication will continue, but that no new round of talks will take place before the US mid-term elections in November.
The US and Mexico on the other hand are still negotiating a new NAFTA deal and are set to continue talks into next week. A deal between the two could further bring Canada back to the negotiation table.
The Kansas City Fed’s George and Dallas Fed’s Kaplan spoke on monetary policy matters overnight. Both back another three to four rate hikes and also noted that political considerations do not play a role when the Fed sets monetary policy; i.e. they are not influenced by recent comments from US President Trump.
Oil prices continue to rise with Brent moving above USD75/bbl. While a lower USD has been a contributing factor to the strong rise seen this week, concerns about tighter supply have been at the centre of the market’s attention. Earlier this week, the decline in US inventories made the headlines and yesterday focus turned to a strike among oil workers in the North Sea.
US manufacturing PMI dropped to 54.5 in August from 55.3 in July and thus to the lowest level since November last year. The data tends to confirm a peak in the US manufacturing cycle.