The Jackson Hole Symposium Starts Today
Market movers today
The Jackson Hole Symposium starts today but financial markets will have to wait until tomorrow to get the key speeches by both ECB President Mario Draghi and Fed President Janet Yellen. There may be some interesting interviews at the fringes though to look out for.
On the data front , US initial jobless claims and US existing home sales are due. Initial claims have been edging lower again in recent weeks and fell to 232k last week – very close to the cycle low in February. It points to a robust labour market with a very low rate of layoffs.
In the UK, the second GDP estimate for Q2 is due for release. The first estimate showed sluggish quarterly growth of 0.3%, driven primarily by the service sector, while construction and manufacturing dragged. However, there is speculation that the second estimate will revise the figure upwards, as we also observed sluggish growth of 0.2% in Q1 and the Bank of England had expected a figure of 0.4%. In the second estimate, we will also get data on the expenditure components and it will be interesting to see whether private consumption growth continues to remain low and investments in Q2 saw high growth (1.2% in Q1).
We have a busy calendar in Scandinavia today: In Norway, the Q2 GDP figures and the Q3 Oil investment survey are due and in Sweden, the Riksbank’s Kerst in af Jochnick is due to speak at 13.00. For more details, see Scandi Markets on page 2.
Selected market news
Risk sentiment was weighed down yesterday by renewed concerns about US politics and US equity markets mirrored the declines in Europe with S&P 500 closing 0.35% lower. In Asia, the picture is more mixed this morning with Japanese and Chinese markets trading slight ly lower, while most other regional indices are higher. One of the drivers appears to be some previous comments from US President Donald Trump, who on Thursday threatened a government shutdown if Congress did not pay for his proposed border wall for Mexico. Trump’s hard rhetoric has added concerns about a potent ial government shutdown in connect ion with the upcoming debt ceiling negotiations and reminded investors that it might not be easy to get a tax reform deal.
On the data side, euro area PMIs showed an upbeat economic picture in August , supporting our const ruct ive view of euro area growth for this year – we forecast 2.0%. In the US, data was more mixed with US Markit PMI manufacturing falling to 52.5 in August from 53.3 against expectations of an increase to 53.5, with PMI service surprising to the upside rising to 56.9 from 54.7 in July.
Mario Draghi’s speech yesterday offered lit t le hints on future monetary policy and while we still have to wait until Draghi’s speech at Jackson Hole on Friday at 21:00 CET for more details, we got a little bit of colour on the ECB’s stance as ECB member Ardo Hansson said in an interview yesterday that he is not currently concerned about the strength of the euro.
