- Friday’s August Non-farm Payroll report came in softer than expected at 142k, versus expectations of around 175k. Whilst the unemployment rate was reported inline with expectations, the report shows that jobs growth has cooled with a net 86k downward revisions over the last two months. Most market analysts believe that the Fed will announce a 25bp interest rate reduction at the September FOMC, however comments from Fed Governor Christopher Waller just after Friday’s data release kept a 50bp cut alive. He said “the current batch of data no longer requires patience, it requires action” adding that he was “open minded” about the potential for a bigger rate cut. The US dollar softened on Friday afternoon and remains on the back foot this morning.
- The outlook for US interest rates and strength of the recovery will remain in focus this week as markets look to this week’s inflation print for clues on whether the central bank will deliver a 25bp or 50bp cut on September 18. Wednesday’s CPI release is the key data release this week and markets expect that CPI rose by 0.2% in August, unchanged from July. If the print is as expected, this would be the fourth consecutive CPI print that is consistent with the Fed’s 2% inflation target and would likely signal a 25bp cut later this month. PPI (Wed) and Friday’s Import Price Index and University of Michigan Sentiment are also on the docket from the US this week.
- The ECB is almost certain to deliver a 25bp rate cut at its policy meeting on Thursday, dropping the benchmark rate to 3.5% from 3.75%, with a further cut expected in December. Price pressures continue to move in the right direction, however sticky services inflation suggests that the ECB will likely be reluctant to committing beyond the December meeting.
- Tuesday sees the release of UK labour market data, which is expected to show further cooling in pay pressures. This is the only major UK data release this week ahead of next week’s CPI report and BoE policy meeting.
We are using cookies to give you the best experience on our website. Download the GPS Cookies Policy for more information. The main types of cookies we use are as follows: strictly necessary cookies, performance cookies, advertisement cookies, and analytics cookies. You can find out more about which cookies we are using or switch them off in settings. Except for strictly essential cookies, you have also the option to decline the usage of cookies at any time. You can do this through this cookie management panel, which appears when you first visit, and you can access it independently through the link provided at the foot of the page.