Weekly Focus

The Fed's Jackson Hole symposium is next week. Last year Powell's hawkish comments sparked an uptick in yields, and this year it will be interesting to hear how they assess the latest more promising inflation data.

Week Ahead – All Eyes on the Jackson Hole Symposium

Once per year, FOMC officials gather at their summer retreat in Jackson Hole, Wyoming for a symposium to exchange views on monetary policy and economic trends. Although this is mostly an academic event, it has been used by Fed leaders over the years to signal major strategy shifts. 

Eurozone PMIs Important for Euro Next Week

Economists see another rate hike in the euro area, but some skepticism remains about whether the rise will happen in September or at a later time. Preliminary business PMI figures for August could provide fresh insight on Wednesday at 08:00 GMT. Even if there's another bad report, a September rate hike might still happen, but it could also be the last. The euro could extend its downleg in this case, unless the Fed chief sends strong dovish signals during the Jackson Hole Symposium.

Performance of Key Market Instruments When 10-year US Yield Rises Above 4%

August is traditionally seen as a quiet month, but once again significant developments are taking place globally. In particular, the 10-year US yield has climbed decisively above the 4% threshold as market participants are scrambling to explain this move amidst a low liquidity environment. A quick look at market history could give us some valuable insight as to what the future holds for euro-dollar and other key market instruments.

Week Ahead – Powell's Jackson Hole Speech Will be Must-See TV

The main event for next week will be the Kansas City Fed’s Jackson Hole Symposium.  Fed Chair Powell’s speech will reiterate that more rate hikes might be needed and that rates should stay higher for longer.  With the recent surge with real yields, Fed Chair Powell can acknowledge that policy is restrictive and that future rate cuts could eventually be warranted as long as inflation has been defeated.

The Weekly Bottom Line: Yields Drift Higher, As Macro Narrative Shifts

The big news this week was U.S. Treasury yields reaching the highest point since 2007 thanks to a string of positive economic data releases. The 10-Year yield reached 4.30% on Thursday, surpassing last October’s high.

Weekly Economic & Financial Commentary: Economic Activity Continues to Fly High

Data on the retail and manufacturing sectors surprised to the upside, while residential construction continued to gather momentum. The FOMC meeting minutes acknowledged the economy's resilience and continued to stress the Committee's resolve to bring inflation back down toward its 2% goal.

Forex and Cryptocurrencies Forecast

The US currency maintained its ascent last week. The minutes from the Federal Open Market Committee (FOMC)'s July meeting of the US Federal Reserve were published on Wednesday, August 16, suggesting the possibility of further monetary policy tightening.

UK PMI Surveys on the Agenda But Focus Will be Across the Pond

With the market anxiously expecting this week’s Jackson Hole gathering, on Wednesday we will get the preliminary UK PMI survey results for August. As the pound remains one of the market’s favorites, a positive surprise at this week’s data releases could quickly reignite the BoE’s rate hike expectations and allow the euro/pound pair to record a new 2023 low.

Crypto Market Fallen Victim to Safe-Haven Demand

Crypto market capitalisation fell 9.7% last week to stabilise at $1.058 trillion, finding buyers on dips below $1.05 trillion. Technically, the market is still above the previous local lows of June, giving hope for a continued uptrend. However, it is worrying that July’s highs are lower than April’s.