Morning Bid: Anticipation builds for Powell blessing on rates
2024.08.20 00:59
A look at the day ahead in European and global markets from Rae Wee
There’s a lot hinging on Federal Reserve Chair Jerome Powell’s speech at the end of this week but, until then, stocks look set for a buoyant ride as investor confidence builds for dovish rhetoric from the world’s most powerful central banker.
Asian shares touched a one-month peak on Tuesday and stock futures largely point to a positive open when London and New York wake up.
Even shrugged off the weight of a stronger yen and hit its highest in more than two weeks.
A chorus of Fed speakers has in recent days signalled their intent for a September rate cut, which makes it all the more unlikely that Powell will deviate from the script on Friday when he addresses the central bank’s annual gathering at Jackson Hole, Wyoming.
Markets are already fully priced for 25 basis points of easing next month, so the focus will be on whether Powell offers clues on the possibility of an even bigger cut, and what he says about the outlook for the world’s largest economy.
Elsewhere, Sweden’s central bank announces a policy decision later on Tuesday, where analysts expect rates to be lowered by a quarter percentage point. They see two more cuts likely before the end of the year.
Canada will report figures for July inflation, which is seen slowing to 2.5% on an annual basis from 2.7% in June. That would likely cement the case for further rate cuts from the Bank of Canada.
In Asia, China left its benchmark lending rates unchanged at a monthly fixing on Tuesday, as expected, given shrinking interest margins at lenders that have limited Beijing’s easing efforts.
Key developments that could influence markets on Tuesday:
– Germany producer prices (July)
– Fed’s Bostic, Barr speak
– Riksbank rate decision
– Canada inflation report (July)
(By Rae Wee; Editing by Edmund Klamann)
