In this Monday morning market briefing, the presenter outlines a busy week of macroeconomic releases and policy events that will shape market sentiment. The core focus is Jerome Powell’s upcoming Jackson Hole speech and the anticipated Fed tapering timeline, framed by recent Fed commentary from Robert Kaplan and Treasury Secretary Janet Yellen’s support for Powell’s reappointment. A quick market snapshot shows a modestly softer dollar, rising equity futures, higher Treasury yields, and a rebound in WTI crude, while gold trades in a narrow range. The host highlights the week’s calendar: flash PMI data for the UK, Eurozone, and US; German IFO; ECB minutes; US home sales, durable goods, Q2 GDP, personal income and spending, core PCE, and the final University of Michigan sentiment reading. He also notes political developments, including the US House’s return from recess to debate a multi‑trillion‑dollar budget and bipartisan infrastructure package, which could affect fiscal outlook. A brief plug for the upcoming AmplifyMe simulation platform concludes the segment, inviting viewers to engage with the community.
Chapters
Okay, very good morning. It is Monday, 23rd of August. Hope you had a fantastic weekend. Of course, this week is going to be bookended on Friday with this guy, Jerome Powell, is going to be giving his muchly anticipated Jackson Hole Symposium speech. And obviously that's going to be one of the main focal points for this week, this month, as we look out for the details around the commencement of tapering at the Federal Reserve. But busy week over all in store. We've got the flash PMI data coming out in just a short while for the UK and the eurozone, in the US today for Monday to kick off the week. We've also got German IFO on Tuesday, and then you've got the ECB minutes coming out later on in the week. And from a US perspective, you've got things like the home sales data on, on Tuesday, durable goods Wednesday, Q2 second reading of GDP on Thursday, then of course Powell with personal income spending data and the final University of Michigan reading on Friday as well. So Plenty to go at in the week ahead. But let's just have a quick look, as we always do, at the charts this morning. And actually, we've got a fairly positive open to kick off the new week. So quick look across these different charts. Both EURUSD and cable in the top left-hand corner are up about 20 and 36 pips respectively. So a bit of a, a reversal, if you like, of sorts, of what we have been seeing across most of these charts. The dollar index this morning is a little bit softer. It's down about 2/10 of 1%. We have seen equity index futures trade higher. The DAX up already around 132. US indices following the overnight positive tone that we've seen in the Asia-Pac region of where all bourses traded on a firmer footing. Very quiet, in fact, in terms of major weekend news flow. I've only got two kind of smaller points that I want to go over in a moment before I go into the actual week ahead calendar. So very much just more positive sentiment overall. So we have had Treasury yields tick up a little bit and the dollar dipping for the first day in 6. And so that's also helped WTI crude just claw back what had been pretty, some pretty persistent losses. So during the Asia Pacific session, and really since the open of electronic trade where we opened pretty much at where we finished at the close on Friday, we've just continued to move back higher. So having traded at the 61 handle We're now trading back up at $63.43, up about $1.27 this morning. Um, elsewhere, Tino's down 2.5%. Gold respecting a relative range for the time being. Again, a little bit of injection of pace with some of the dollar weakness seen overnight to bring it up to the top end of a short-term trading range here from the last couple of sessions. For the time being, up around $3. So A couple of weekend news stories I said I would get you up to speed on, starting with Fed speak from Robert Kaplan, who is a non-voting member, but I thought quite interesting because Kaplan, as you know, sits at the much more hawkish end of the spectrum. And in fact, he came out and said on late on Friday that he's open to adjusting his view that the Fed should start tapering its asset purchase program sooner rather than later if the Delta variant strain persists. And that hurts economic progress. So just quite interesting, of course, timing going into the Jackson Hole speech on Friday that Kaplan's kind of just eased off the hawkish pedal a touch here. Then the other thing that was of interest over the weekend, as I said, overall was pretty quiet though on that front in terms of actual meaningful news for the open this morning, was this, that the US Treasury Secretary Janet Yellen has told senior White House advisors that she supports reappointing Jerome Powell as the Federal Reserve chair, according to people familiar with the matter. And the general interpretation of this is a couple of things. For one, her endorsement definitely would increase the likelihood of him being reappointed. Obviously, this is, um, quite different to the Trump era, where obviously having the Treasury Secretary giving such a stamp of approval is likely to be listened to very much so by the president. And so as far as markets take this, it's not as if this is a short-term positive reaction that's created these moves this morning. But indirectly, the markets do like continuity, particularly around policy setting of something of such magnitude as monetary policy. So generally speaking, whenever you have a replacement, there's a degree of uncertainty around that new person. Are they going to be able to handle the kind of gravity of the situation? Are they going to change the direction of Fed policy? And all of that can have negative connotations as far as market prices concerned. So overall, markets tend to react more positively to continuity, of which this would be the case. So, yes, something just to be of note in terms of the timing of this. So a Fed chair essentially serves a 4-year term. And so Powell's 4-year term comes up at the end of February. And hence the reason why this discussion is happening right now. Just before I move on, don't forget we've got 22 days left until the new AmplifyMe platform launches. So for any students, whether school, college, university, or graduate, this is going to be your kind of one-stop shop to take part in our latest free simulation technology that we use at all of the big banks, and also our community where we'll have tons of exclusive content that the team will be putting out. So I'll drop the link into the video. Don't forget to register for that if you definitely want to take part in that community. We'd love to have you involved. If you're watching on YouTube, don't forget to like and subscribe. Otherwise, look at the calendar for the week ahead. As I said, Monday we really kick off in earnest with the flash manufacturing service PMI. So as ever, definitely these are going to be potentially market moving for the respective currency markets. So euro and pound to be keeping an eye on today, but overall the greater context of the week certainly is going to be more driven by the US dollar. But short-term intraday, keep an eye on those flash PMIs coming out this morning. Then just quickly, an overview of Europe first, and then we'll talk about the US calendar. On Wednesday, you've got the German IFO data coming out um, and that's going to be always quite interesting to watch. And that comes out on Wednesday morning. And then pretty much that is it as far as mainland Europe is concerned. The only other thing of note is going to be the ECB minutes, which we're going to get on Thursday. And as far as they are concerned, it's going to be scrutinized for any clues over the ECB stimulus plans before a decision within months on how economic support will evolve after the current end date of its Pandemic Purchase Program, the PEP, comes to, uh, towards a conclusion at the end of Q1 of 2022. So much like what the Fed are doing with this kind of front-running the communication of tapering, takes many months for this actually to be implemented. And so we start turning our attention to the ECB for similar signs, given that predetermined end date of that extraordinary stimulus program that they enacted during the pandemic crisis. Otherwise, for the US, yeah, it's pretty busy as well. So this afternoon, um, you get the relative flash PMI data as well coming out of the States today. You've then got new home sales on Tuesday, durable goods Wednesday, get the second reading of US Q2 GDP expected to be unrevised at 6.6% on Thursday alongside initial jobless claims expected to still be tracking down at around the 350 margin. Jackson Hole does begin, but remember, Powell doesn't speak until Friday. Alongside the Powell speech, you're going to get personal income spending, um, core PCE price index, and the final University of Michigan reading as well. So I'm not going to really go into Powell too much at this point in time. That obviously is the key event. Analysts at ING have said, and this is generally the market consensus, that most are expecting the Fed to shed light on its tapering decision which could be announced as early as September and started in October. That would be the much more aggressive on the hawkish side in terms of that timeline. The other thing that's going to be in focus is the length of the tapering cycle as well. So with a few FOMC members recommending quicker Fed tapering cycle than was most recently seen back in 2014, the last time that this kind of sequence was, was exercised by the Federal Reserve. But as I said, I'll be going over this in way more detail when we get to the back end of the week. The other thing as well is just keep an eye out for any other kind of Fed commentary, any source commentary. The tapering announcement and people looking for more details on that is a big event on Friday. And so up into that point, it wouldn't be surprising if we get some little more details just kind of drip fed into various news agencies. So something to be aware of. And the final thing to mention was what's happening this week is that the House of Representatives in US politics returns from summer recess early to consider the US president's spending plans, including the multi-trillion dollar budget. Um, what the FT was saying at the weekend is that Democratic congressional leaders and the White House trying to pass this huge budget and their $1 trillion bipartisan infrastructure package in tandem in order to satisfy them, both the progressive and the moderate wings of the Democratic Party. Um, yet the tactic has exposed though some sharp rifts among Democrats, i.e., trying to push through both bills at the same time, and has raised the possibility that neither the budget nor the infrastructure bill will make it over the line. So again, just something to be aware of and keep an eye on. I'm sure you're going to get more commentary out the likes of Nancy Pelosi and others as we go through the week. But that is it. I'll let you guys get on with the session. Feel free to drop me a comment on the video if there's any questions at all, and have yourself a great, great day and a great week ahead. Thanks very much.
