Week Ahead
This morning eurozone consumer confidence will be of interest, and we will hear from the ECB’s Lane, the BoE’s Pill (and again on Tue) and Bailey, and Fed’s Miran, Williams, Musalem, Hammack and Barkin. A host of prelim. HCOB manufacturing and service PMI prints across Europe follow on Tuesday. We also have the S&P PMI readings for the UK and the US, and the OECD will release its Interim Economic Outlook Report. The Fed’s Chair Powell discusses the economic outlook, while Bowman and Bostic speak at separate events. Germany IFO business climate, and US home sales and building permits feature on Wednesday. Ahead of that the BoE’s Greene speaks on supply shocks and monetary policy, and later Daly delivers a keynote remark on the economy. The third estimates for US Q2’25 GDP, personal consumption and the core and headline GDP price index will garner market interest, as will US jobless claims and existing home sales. Central bank chatter includes the Fed’s Goolsbee, Williams, Daly, and Bowman. Eurozone inflation expectations, Japan CPI, and US PCE price index, personal income and spending, and the Uni. of Michigan consumer sentiment, will keep markets busy on Friday.
Last week, US data remained mixed. The most significant US data release was a sharp fall in weekly jobless claims, which reversed the previous week's spike. This came after August's retail sales report, which surprised to the upside, while housing starts and building permits disappointed. The yield on the 10-year UST rose 6bps to 4.13%, while the S&P Index reached new highs, up 1.22% in the week. The dollar rose marginally, and Brent crude fell to $66.67pb.
However, all eyes were on the Fed, which, as expected, cut rates 25bps to a range of 4.00-4.25%. The median dot plot presented a contrasting view, with two further cuts priced in for the year, however, a significant number of officials still expect no further cuts. Following the Fed’s “risk-management cut” Chair Powell noted the difficult trade-off facing the central banks, given a shift from a previous focus on combating tariff-driven inflation to addressing a weakening employment picture. The Bank of England and European Central Bank, in contrast, held their rates steady to continue tackling inflation.
Elsewhere, China’s retail sales growth held steady in August, and real estate investment continued to show weakness, indicating that the property sector still requires further stimulus. On the policy front there was a focus on a new round of funding for a consumer goods trade-in programme, as the government continues to boost domestic consumption. This morning the PBoC maintained its key lending, a decision that aligns with market expectations and reflects a cautious approach to monetary policy.
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