What to Watch Across Markets This Week: August 26, 2024

• Global Central Banks Signal Upcoming Rate cuts
• The Fed’s key inflation measure, the Core PCE Price Index, could shape upcoming rate cut decisions.
• Economic concerns may be emerging from China.
• Australia's CPI could prompt the RBA to adopt a more dovish stance.

Last Week Recap

Jackson Hole Symposium Summary

On Friday, August 23, 2023, Officials from three major central banks signaled that they are preparing to lower interest rates in the coming months, marking the end of an era of high borrowing costs as the global economy moves past post-Covid inflation. Fed Chair Jerome Powell indicated that the U.S. central bank is likely to lower rates in September, as concerns shift from inflation to weakening labor markets and overall growth. European Central Bank officials echoed similar sentiments, with some supporting further rate cuts in September due to a subdued growth outlook in Europe. The Bank of England also hinted at potential rate cuts, as inflation risks appear to be decreasing. Central banks in Canada, New Zealand, and China are also easing, while Japan remains an exception with its first tightening cycle in 17 years. Powell emphasized the growing importance of labor market conditions over inflation in future policy decisions, noting that the Fed will closely monitor upcoming data before determining the pace and timing of rate cuts.

Key Events to Watch This Week

The U.S.

On Friday, August 30, 2024, the Bureau of Economic Analysis is set to release the Core PCE Price Index m/m data at 4:30 PM GMT+4 (Dubai Time), a key metric closely watched by the Fed. The market expects the rate to hold steady at 0.2%, indicating stable inflation. If this expectation is met, it could likely increase confidence in the Fed’s potential to begin cutting rates in its upcoming meeting in September, which might lead to a drop in the U.S. Dollar's value, as per analyst analysis.

China

The Manufacturing and Non-Manufacturing PMI data are scheduled for release on Saturday, August 31, 2024, at 5:30 AM GMT+4 (Dubai Time), with both indices expected to decline. The Manufacturing PMI is projected to drop to 49.2 from 49.4, signaling a contraction in the sector, while the Non-Manufacturing PMI is forecasted to decrease to 50.0 from 50.2, its lowest point since December 31, 2023. If these predictions hold, it could raise concerns about economic activity in China, potentially impacting global markets in a negative way, including crude oil, as China is one of the world's largest importers, as per analyst analysis.

Australia

On Wednesday, August 28, 2024, the Australian Bureau of Statistics will release the Consumer Price Index (CPI) y/y at 5:30 AM GMT+4 (Dubai Time). The market expects a decline, indicating easing inflation pressures. If this occurs, it could strengthen the Reserve Bank of Australia's (RBA) confidence to ease its hawkish stance, as the RBA is looking for further signs of declining inflation before considering rate cuts, as per analyst analysis.