- Markets in August
- Global market indices
- Commodity sector news
- Currencies
- Cryptocurrencies
- Fixed Income
- What to think about in September
- Key events in September
Markets in August
The beginning of August was volatile for markets as they reacted to weaker US nonfarm payroll and employment data and rising concerns of a coming US recession. Markets were also hit by a surprise interest rate rise from the Bank of Japan (BoJ) that caused chaos in currency markets as carry trades unwound. The S&P 500 lost 3% on 5th August, notching its biggest one-day drop since 2022. However, markets quickly recovered on rising expectations of imminent interest rate cuts from the Federal Reserve and improving US economic data.
The S&P 500 is +1.27% MTD, Dow is up +1.00% MTD, while Nasdaq 100 is +1.13% MTD. The NYSE is +1.89% MTD.
European equity markets were uniformly up in August. Like their US counterparts, they were affected by disappointing drops in Technology sector stocks. However, given their higher degree of internationalisation, they’ve also been hit by falling demand in China and other non-EU markets.
In the bond market, yields have decreased in the US, the UK and in Europe. The yield on the 2-year US Treasury note, which is closely tied to the Fed Funds rate, has fallen from 4.36% at the end of July to 3.87%. The benchmark 10-year US Treasury note yield has declined to 3.836% from July's 4.035%. In Europe, the 10-year German bunds yield has dropped -4.7 basis points (bps), and the UK 10-year yield has risen by 0.1bps.
The Economic Picture
The US labour market is showing signs of softening, with the US economy adding just 114,000 nonfarm payroll jobs in July, while the unemployment rate rose to 4.3% and average hourly earnings growth slowed to 3.6%, the slowest since May 2021. On a positive note,the labour force participation rate rose to 62.7%, back where it was in April. Nonfarm business sector productivity increased at a 2.3% annualised rate in Q2 after rising at an upwardly revised 0.4% pace in the January-March period. The Conference Board's consumer confidence index rose to a five month high in August to reach 103.3 from an upwardly revised reading of 101.9 in July. The Expectations Index, based on consumers' short-term outlook for income, business, and labour market conditions, came in at 82.5. That was the highest level since August 2023 and was up from 81.1 in July. However, the share of consumers who viewed jobs as "plentiful" slipped to 32.8% from 33.4% in July. Some 16.4% of consumers said jobs were "hard to get," up from 16.3% in July. The report indicated that overall sentiment improved, although consumers expressed concerns about stock market volatility and rising unemployment in August. The proportion of consumers predicting a recession remained unchanged.
In addition, the University of Michigan's consumer sentiment index Increased to 67.8, up 2.1% from July and above the 66.9 economists had expected. This is the highest reading since June and the first increase in five months. The expectations index improved to 72.1, the highest in four months vs July’s 68.8, while the current economic conditions gauge edged down (60.9 vs 62.7). Both the year-ahead and the five-year inflation expectations were unchanged at 2.9% and 3%, respectively.
The flash Composite PMI Output Index in August was at 54.1, slightly down from July’s 54.3 and a 4-month low. The Flash US Services Business Activity Index for August came in at 56.0, also up from June’s 55.3, a 28-month high. The service sector outperformed manufacturing for a fourth straight month. The Flash US Manufacturing PMI hit an 8-month low, falling to 48.0 from July’s 49.6. All five components of the PMI weakened in August and manufacturing employment growth meanwhile slowed to near-stagnation. This weakness does indicate that there may be some trouble ahead. Another potential concern is that the US savings ratio fell in Q2, to 3.4%, the lowest since Q4, 2022, signalling buoyant consumer confidence, despite softening in the labour market.
In the eurozone the ECB still looks to be on course for a cut in September despite eurozone inflation rising slightly to 2.6% in July from 2.5% in June. Core inflation - excluding volatile items such as food, energy, alcohol, and tobacco - remained at 2.9% year on year for the third consecutive month, as services price pressures continued. The ECB’s chief economist, Philip Lane, said at the Jackson Hole symposium that the bank’s goal of getting inflation back to 2% is “not yet secure” and that interest rates will need to stay restrictive for the time being. Morningstar has forecast headline inflation to fall to 2.2% in August, mainly as a result of falling energy prices in August 2024 versus August 2023. On the growth front, Eurostat reported that the euro area's seasonally adjusted GDP increased by 0.3% in the second quarter of 2024, compared to the previous quarter. This is an increase of 0.6% compared to the same quarter in 2023. In addition,the HCOB flash Composite PMI for August rose to 51.2 from 50.2 in the previous month.
In the UK, inflationary pressures continued, with the headline rate rising to 2.2% from June’s 2.0% year-on-year. While core inflation measured 3.3%, services prices remained elevated at 5.7%. Concurrently, unemployment surprisingly fell in August to 4.2% from 4.4%, while the annual growth in total earnings (including bonuses) for the April to June period was 4.5%.
On the growth front the UK continued to do well. The S&P Global Flash UK PMI Composite Output Index rose to 53.4 in August from 52.8 in July, signalling a solid upturn in private sector activity. The flash Services PMI also rose. It came in at 53.3, up from July’s 52.5 and a 4-month high. Consumer sentiment is remaining steady, as evidenced by the GfK Consumer Confidence Survey, which remained at -13, the same as July 2024. This is the highest level since September 2021.
On 1st August, for the first time in four years, the Bank of England (BoE) cut its benchmark rate. It cut rates by 25 basis points from 5.25% to 5.00% after headline inflation fell to the BoE target of 2% in May and June. However, BoE Governor Andrew Bailey said at the Jackson Hole symposium this month that despite the second-round inflation effects appearing to be smaller than expected. it is "too early to declare victory" over inflation, noting that inflation has not yet returned to target levels on a sustained basis. He stressed that monetary policy would need to remain "restrictive for sufficiently long" to ensure that inflation is kept in check. Markets are expecting at least one more rate cut this year with November considered most likely.
Global Market Indices
US:
S&P 500 +6.88% QTD and +7.97% YTD
Nasdaq 100 -1.00% QTD and +16.38% YTD
Dow Jones Industrial Average +5.45% QTD and +9.45% YTD
NYSE Composite +2.41% QTD and +17.24% YTD
The Equally Weighted version of the S&P 500 posted a +1.15% this month, its performance is +9.89% YTD, 7.35 percentage points lower than the benchmark.
The S&P 500 Consumer Staples sector is the top performer this month at +5.50% MTD +15.47% YTD, while the Energy sector is -3.79% MTD, and +7.09% YTD.
A decline in technology stocks led to a broader market downturn on Wednesday, with major stock indexes closing lower as investors awaited Nvidia's quarterly results.
In anticipation of the earnings release, volatility returned to the markets. At one point, the S&P 500 was on track for its worst drop since the 5th August decline. While the index managed to recover somewhat, it ultimately closed down 0.6%. The Nasdaq 100 experienced a more significant decline of 1.2%.
Super Micro Computer, a manufacturer of specialised servers utilising Nvidia chips, added to investor concerns regarding a potential bubble in AI stocks. The company's shares fell 19% on Wednesday after it announced a delay in filing its annual financial statement. This followed a report from short-seller Hindenburg Research, which revealed its bearish position on the company.
In other market news, Warren Buffett's Berkshire Hathaway achieved a significant milestone, closing with a market capitalization exceeding $1 trillion for the first time.
As of 28th August, according to LSEG I/B/E/S data, 168 out of the 199 companies comprising the Retail/Restaurant Index have released their Q2 2024 EPS results, accounting for 84% of the index. Among these companies, 72% surpassed analysts' earnings expectations, while 4% met estimates and 24% fell short. Consequently, the blended earnings growth estimate for Q2 2024 currently stands at 14.2%.
In terms of revenue, the blended growth estimate for the entire index is 3.7% for Q2 2024. Of the companies that have reported thus far, 51% exceeded revenue forecasts, whereas the remaining 49% reported revenue below expectations.
Analysing sub-industries, Broadline Retail stands out with the highest y/o/y earnings growth rate at 85.1%, while Personal Care Products has the highest earnings surprise factor of 23.3%. Conversely, the Distributors sub-industry exhibits the lowest earnings growth at -7.5%, coupled with the lowest surprise factor at -3.8%. The overall Retail/Restaurant Index maintains a surprise factor of 8.5%.
In anticipation of Q3 2024, 19 retailers have issued negative preannouncements regarding their EPS, while six have provided positive EPS guidance thus far. Additionally, among those retailers offering revenue guidance, 18 have cautioned about potentially disappointing results, whereas five have indicated the possibility of exceeding previous revenue expectations.
Retailers' outlooks face headwinds: Inflation and declining consumer sentiment. Persistent inflationary pressures and declining consumer confidence continue to impact the performance of various US retailers. A recent wave of companies has revised their outlooks downwards, citing cautious consumer behaviour.
Department store Kohl's, for example, anticipates a steeper drop in sales for its fiscal year after reporting a year-on-year revenue decline in the second quarter. The company's CEO attributed this to "a continued challenging consumer environment and softness in our core business."
Similarly, Bath & Body Works experienced a y/o/y sales decrease in Q2, which it attributed to a "choppier macroeconomic environment" and "cautious, value-seeking" customers. The company now forecasts a sharper decline in full-year sales.
Peanut butter manufacturer JM Smucker also lowered its outlook, citing "inflationary pressures and diminished discretionary income," along with the divestiture of certain pet food brands.
Abercrombie & Fitch offered a somewhat contrasting perspective, reporting increased sales and raising its full-year revenue growth outlook. However, the company's CEO acknowledged the "increasingly uncertain environment" in which the group operates.
These developments underscore the ongoing challenges faced by many retailers as they navigate an economic landscape marked by inflation, shifting consumer sentiment, and broader economic uncertainty.
Europe:
Stoxx 600 +1.79% QTD and +8.69% YTD
DAX +3.00% QTD and +12.12% YTD
CAC 40 +1.31% QTD and +0.46% YTD
FTSE 100 +2.20% QTD and +7.90% YTD
IBEX 35 +3.55% QTD and+12.17% YTD
FTSE MIB +2.19% QTD and +11.63% YTD
In Europe, the Equally Weighted version of the Stoxx 600 is +0.05% in August, and its performance is +5.85% YTD, 2.84 percentage points below the benchmark.
The Stoxx 600 Retail is the leading sector this month, up +4.30% MTD +12.19% YTD, while Basic Resources has exhibited the weakest performance at -4.61% MTD and -9.54% YTD.
STOXX 600 Earnings Q2 2024
As of 27th August, according to LSEG I/B/E/S data for the STOXX 600, Q2 2024 earnings were expected to increase 3.1% from Q2 2023. Excluding the Energy sector, earnings are expected to increase 2.2%. Second quarter revenue is expected to decrease 0.7% from Q2 2023. Excluding the Energy sector, revenues are expected to decrease 1.2%. As of 27 August 2024, 284 companies in the STOXX 600 reported earnings to date for Q2 2024. Of these, 52.8% reported results exceeding analyst estimates. In a typical quarter 54% beat analyst EPS estimates. As of 27th August 2024, 342 companies in the STOXX 600 reported revenue to date for Q2 2024. Of these, 58.5% reported revenue exceeding analyst estimates. In a typical quarter 58% beat analyst revenue estimates.
Financials, at 75%, is the sector with most companies reporting above estimates. At the same time, it is the sector that beat earnings expectations by the highest surprise factor, at +9%. In the Real Estate sector only 20% of companies reported above estimates. Basic Materials’ earnings surprise factor was the lowest at -9%. The STOXX 600 surprise factor is 4.4%. The forward four-quarter price-to-earnings ratio (P/E) for the STOXX 600 sits at 13.3x.
During this week, 3 companies are scheduled to report quarterly earnings.
Global:
MSCI World Index +3.40% QTD and +14.58% YTD
Hang Seng -0.15% QTD and +3.78% YTD
Mega cap stocks had a mixed performance in August with Alphabet -5.07%, Amazon -8.65%, Apple +1.99%, Meta Platforms +8.83%, Microsoft -1.85%, Nvidia +7.34%, and Tesla -11.34%.
Nvidia’s Q2 earnings. Nvidia's most recent quarter showcased the sustained momentum of the AI boom, with sales and earnings more than doubling y/o/y. This impressive performance underscores the ongoing strength of the nearly two-year-old secular trend, despite concerns about potential overinvestment in the sector.
The company also reported a narrowing of gross profit margins compared to Q1. CFO Colette Kress attributed this partly to production challenges associated with Nvidia's next-generation Blackwell chips, which necessitated a design modification. However, the company affirmed that production will ramp up as planned and demand remains robust.
While the overall results remained strong, they underscored challenges arising from the increased complexity of Nvidia's latest products and indicated a moderation in growth from the exceptional pace of the past year.
Q2 revenue more than doubled from the same period last year, reaching $30 billion, with projections for Q3 at approximately $32.5 billion. Nvidia's profit also more than doubled to $16.6 billion. All these figures surpassed analysts' estimates compiled by FactSet.
The AI boom has also presented challenges. To enhance the performance of its Blackwell chips, Nvidia adopted a new silicon-stitching method, which analysts suggest is contributing to manufacturing difficulties. Nvidia announced a design change to Blackwell to improve manufacturing quality. The company recorded provisions of $908 million in the latest quarter, primarily related to these Blackwell manufacturing issues.
Nvidia's underlying strength remained evident in its Q2 results. The robust demand for data centres was noteworthy, with this segment experiencing a 154% y/o/y growth in Q2, contributing $26.27 billion to the total revenue of $30.04 billion.
An unexpected highlight of the earnings call was the strength of Nvidia's capital return. Supported by strong free cash flow generation ($13.5 billion in Q2, $47 billion on a trailing twelve-month basis), the company returned $7.4 billion to shareholders in Q2, consisting of $7.2 billion in share repurchases and $246 million in dividends. Additionally, Nvidia announced an additional $50 billion share repurchase authorization.
Energy stocks haveexperienced a negative performance so far this month, with the Energy sector -3.79% in August and +7.09% YTD due to different economic data signalling softening demand in China and subdued demand in the US compared to previous years. Energy Fuels -19.34%, Halliburton -10.61%, Baker Hughes Company -9.71%, Chevron -9.02%, Apa Corp -8.40%, Phillips 66 -7.22%, Occidental Petroleum Corporation -6.64%, Shell -5.07%, Marathon Petroleum -4.01%, and ExxonMobil -1.75%, while ConocoPhillips is +0.85%.
Materials and Mining stocks has had a slightly positive month in August. The Materials sector is +0.62% so far in August and +8.25% YTD. Gold reached new highs in August and is +3.07% MTD +21.27% YTD, but copper declined -0.36% MTD. Sibanye Stillwater -12.85%, Nucor Corporation -9.14%, Celanese Corporation -8.74%,Albemarle -6.05%, Mosaic -3.73%, Freeport-McMoRan -3.39%, and Yara International -2.35%, while Newmont Mining is +5.62%.
Commodities
Oil prices had a difficult August with WTI -4.80% MTD and Brent -4.23% MTD. This was largely due to concerns around Chinese demand despite global oil demand increasing 870 kb/d in 2Q24 according to IEA data.
Libya's oil shutdown: potential impacts on global oil balances and OPEC response. On Monday, 26th August, Libya’s eastern government declared the closure of all oil fields in the country, leading to a halt in production and exports. While Libya’s National Oil Corp (NOC) has not yet confirmed this, the Waha Oil Company stated it will initiate production cuts, potentially culminating in a complete production stoppage due to protests and external pressures. This shutdown is the latest development in a series of events linked to the control over the nation's political and economic resources. As an OPEC producer, these production outages could impact global oil balances, although the magnitude and OPEC's response are contingent on the duration of this disruption.
BTU Analytics’ latest forecast suggests a largely balanced global market this year, with an oversupply of approximately 63 Mb/d (million barrels per day). For 2025, BTU Analytics projects an average oversupply of 164 Mb/d, assuming OPEC will not reverse the November 2023 production cuts. Year-to-date production in Libya has averaged 1.15 MMb/d, as per the IEA and OPEC's direct communication and secondary sources. Considering historical trends, Libyan production has faced significant declines in the past. For instance, during the civil war from August 2013 to May 2017, production averaged only 478 Mb/d. Similarly, during the COVID pandemic, production plummeted to as low as 90 Mb/d, and again in 2022 due to internal political discord. Current forecasts anticipate Libyan production to reach around 1.19 MMb/d this year. However, if the announced shut-ins materialise, this entire volume is at risk for an indefinite period.
BTU’s sensitivity analysis indicates that, assuming all other supply and demand factors remain constant, a one-month outage would shift the average 2024 balance from a 63-Mb/d surplus to a 42-Mb/d deficit. A three-month outage would result in a global market shortfall of 252 Mb/d in 2024, while a six-month outage would lead to a deficit of 358 Mb/d. In 2025, a six-month outage would transform the market from the currently forecasted 164-Mb/d surplus to a 46-Mb/d deficit.
OPEC+ is able to readily compensate for any production outages in Libya. The producing group has spare capacity of 5.47 MMb/d, excluding Iran, Libya, and Venezuela. Considering the nature of the announced outage and recent apprehensions about global demand, OPEC might choose to maintain current production levels, leaving the near-term market trending short, which would exert upward pressure on pricing. However, the presence of ample spare capacity is likely to prevent Brent prices from exceeding $90/bbl in the near future, as infill production could be reinstated at any point.
Gold's festive outlook. Industry officials anticipate robust gold demand in India during the upcoming festive season, attributed to the substantial reduction in import duty which has made gold prices more attractive to retail consumers. This surge in demand from the world's second-largest gold consumer could potentially bolster global gold prices. However, it could also widen India's trade deficit and put downward pressure on the rupee. In July, in an attempt to curb smuggling, the Indian government slashed import duties on gold from 15% to 6%.
Gold demand in India typically strengthens towards the end of the year, coinciding with the traditional wedding season and major festivals such as Diwali and Dusherra, during which gold buying is considered auspicious. Retail demand has already shown improvement following the duty cut.
Gold has rallied this year, surging +22% and reaching a peak of $2,531.60 per ounce last week, marking its best performance since 2020.
In China, industry experts predict gold demand to improve in the coming months as consumers adapt to higher prices. Economic uncertainties, concerns about currency depreciation, and the appeal of gold as an alternative asset amidst the downturn in the property sector are driving investment flows. The PBoC, which was the world's largest single buyer of gold in 2023 according to the World Gold Council, paused its gold purchases in May and has continued this pause through July. However, new quotas issued to several Chinese banks in August are intended to regulate the flow of gold into the country. The anticipated rise in seasonal demand later in the year, coupled with sustained investment interest, suggests continued strength in the Chinese gold market.
Currencies
The dollar continued to fall in August on rising expectations of the Fed beginning its rate cutting cycle in September. The dollar index is -2.93% MTD, its worst monthly decline since November 2023.
The GBP is +2.61% MTD and +3.61% YTD against the USD. The BoE cut rates by 25 bps on 1st August and growth has been stronger than expected, coming in at 0.6% in the three months to June after a rise of 0.7% in Q1 2024. The BoE is expected to keep rates unchanged in September as the BoE is likely to want to see the new budget, due on 30 October to better understand the implications of any fiscal or regulatory policy changes on the economy and bank operations. Another rate cut is largely priced in for November.
The EUR is +2.74% MTD and +0.78% YTD against the USD. The ECB is still widely expected to cut rates again in September following on from its first cut in June. ECB Chief Economist Philip Lane stated at the Jackson Hole symposium that there had been “good progress” so far in taming price pressures across the euro area but stressed that monetary policy will have to remain in restrictive territory to get to target..
However, the dollar gained on Wednesday with the dollar index +0.5% to 101.11, putting the dollar on pace for its largest daily percentage gain since mid-June. The rise may be due to month-end buying and technical factors after it fell to its weakest in more than a year this month following concerns around a possible recession and hawkish signals from the Bank of Japan.
Cryptocurrencies
Bitcoin -8.47% MTD and +40.90% YTD
Ethereum -21.53% MTD and +10.36% YTD
Crypto came under pressure this month as US stock markets were hit by volatility earlier in the month and there is still uncertainty around the extent of the Fed’s imminent rate cuts. However Spot Bitcoin exchange-traded funds (ETFs) logged their eight day in a row of positive daily net inflows on Monday, recording $202.51 million according to SoSoValue data. The price of Bitcoin has also picked up following comments from Fed Chair Jerome Powell at the Jackson Hole symposium. It appears that while the fear index is high, institutional investors are still buying cryptocurrencies, particularly Bitcoin. The volatility and sideways movements seen this month may therefore simply be a signal of consolidation.
Note: As of 6:00 pm 28 August 2024
Fixed Income
US 10-year yield -56.6 basis points QTD -4.5 basis points YTD to 3.836%.
German 10-year yield -24.3 basis points QTD +24.9 basis points YTD to 2.258%.
UK 10-year yield -19.7 basis points QTD +44.1 basis points YTD to 3.980%.
US Treasury 10-year bond yields are -19.9 basis points (bps) so far in August. Yields have been declining on signs of a softening economy and cooling inflation.
Market expectations for a September rate are now fully priced following Fed Chair Jerome Powell’s comments at the Jackson Hole symposium that “the time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.” Chicago Fed President Austan Goolsbee noted that inflation-adjusted interest rates have risen as price pressures have eased, even though nominal borrowing costs in the US have been the same for more than a year. The CME's FedWatch Tool gives a 63.5% probability of a 25 bps cut and a 36.5% probability of a 50 bps cut. Swap traders are pricing in a total of over 100 bps worth of reductions for the year. However, traders will be looking closely at Friday’s PCE data for further indications of the probable depth of September’s cut.
The benchmark German 10-year yield is -4.7 bps in August at 2.258%, while the UK 10-year yield is +0.1 bps through August at 3.980%. The spread between US 10-year Treasuries and German Bunds contracted by -15.2 bps from 173.0 bps on 31st July, it currently stands at 157.8 bps.
Italian bond yields, a benchmark for the eurozone periphery, are -0.4 bps this month to 3.643%. Consequently, the spread between Italian and German 10-year yields widened by 4.3 bps to 138.5 bps from 134.2 bps at the beginning of the month.
The futures markets are pricing in 63 bps of further ECB rate cuts by the end of the year, little changed from last week.
Note: Data as of 6pm EDT 28 August 2024
What to think about in September 2024
European banks: the quiet value play of 2024? European banks have displayed a quiet but impressive performance in 2024, with their index climbing +17.6% YTD, outperforming the broader STOXX 600's +8.8% gain. Despite this solid run, analysts appear to think valuations are still attractive, with BlackRock noting P/E ratios currently at 6x compared to the long-term average of 13x.
Key trends observed in Q2 earnings include robust loan growth, particularly in Spanish and Irish banks, widespread deposit growth, and appealing capital return plans. BlackRock further suggests that banks with strong retail franchises are well-positioned to capture deposits as wages increase. Reuters has reported that bank earnings grew y/o/y by over 15% in Q2, surpassing Q1's 13% y/o/y growth, and continue to see net upgrades while most other sectors are experiencing downgrades.
Ranmore Fund Management echoes the sentiment, stating that value stocks, particularly European banks, are attracting renewed interest as the market diversifies away from the AI-driven tech rally. The predictable earnings from mortgage books, coupled with low earnings multiples, are deemed attractive for investors seeking value and stability in the current market environment. Notably, some banks trade at very low single-digit earnings multiples, a stark contrast to companies like Apple, which trades at over 30x earnings.
Can European economies boost productivity to counter inflationary risks? European economies are grappling with the complex challenge of maintaining fiscal discipline while addressing wage pressures and inflationary concerns. Across major economies like the UK, Germany, and France, public sector wage settlements are on the rise. This trend has the potential to fuel services inflation, thereby complicating the efforts of central banks to ease monetary policy. Both the ECB and BoE have raised concerns about the impact of sluggish productivity growth, particularly in the public sector and "intangible-intensive" industries, on the persistence of inflation.
Analysts have observed that central bankers are emphasising the need for sustained restrictive policies despite market expectations of rate cuts. In Germany, the economic rebalancing towards the services sector, driven by weakness in manufacturing and increased public spending, has sparked concerns about the long-term trajectory of productivity growth. The UK faces a similar predicament, with the recent Indeed wage tracker indicating upward wage pressures.
Governments are caught between the need to implement spending cuts and the pressure to address wage demands. Analysts caution that fiscal expansion without corresponding improvements in productivity could lead to sustained inflationary pressures and elevate the risk of stagflation.
Key events in September
The potential policy and geopolitical risks for investors that could negatively affect corporate earnings, stock market performance, currency valuations, sovereign and corporate bond markets and cryptocurrencies include:
10-24 September 2024 UN General Assembly. This will be the opening of the 79th session of the UN General Assembly. This will include the General debate, the Summit of the Future, a High-level plenary meeting on addressing the existential threats posed by sea level rise, a meeting on commemorating the International Day for the Total Elimination of Nuclear Weapons, and a meeting on antimicrobial resistance.
10 September 2024 US presidential debate, Philadelphia, Pennsylvania. This is the first of two Presidential debates between Republican nominee and former President Donald Trump and Democratic nominee and current Vice President Kamala Harris. There have been questions about the debate actually taking place, with Trump threatening to pull out as he questioned the fairness of the news channel hosting the debate. Harris is now beating Trump about 48% to 45% in an Economist poll taken after the Democratic National Convention, though the size of her lead remains unchanged since before the convention. The margin of error of these polls essentially still make this a race too close to call.
12 September 2024 ECB Monetary Policy meeting. Despite some reservations by ECB policymakers such as Dutch central bank chief Klaus Knot who wants to see key data first, the ECB is widely expected to cut rates again by 25 bps at this meeting.
17-18 September US Federal Reserve Monetary Policy meeting. Given that markets have priced in at least a 25 bps cut during this meeting, the main question is how much further and faster will the Fed go? DespiteFed Chair Jerome Powell last week saying the “time has come” for officials to lower interest rates, some policymakers such as Atlanta Fed President Raphael Bostic, are likely to remain cautious and data dependent out of fear of being in a situation where the Fed is forced to raise again after a cut. Much will depend on Friday’s personal consumption expenditures price index (PCE) data and the August jobs report due on 6th September.
19 September 2024 Bank of England, Monetary Policy meeting. The BoE cut rates by 25 basis points in a 5-4 vote on 1st August. Although markets are anticipating another rate cut this year, it is unlikely that it will happen before the new budget on 30 October. With growth still strong the BoE has some headroom to wait.
20 September 2024 Bank of Japan Monetary Policy meeting. Following on from the BoJ's board decision to raise the overnight call rate target to 0.25% from 0-0.1% in a 7-2 vote in July and the collapse in the Yen carry trade that followed this, the BoJ has reiterated that it would continue to raise interest rates if inflation stayed on course, while also closely monitoring financial market conditions. Q2 GDP data showed Japan's economy expanded by a much faster-than-expected 3.1% annualised rate. The rebound in growth was largely attributed to a robust increase in consumption. Nevertheless, despite the Japanese Cabinet Office upgrading its economic assessment in itsmonthly economic report for Augustfor the first time since May 2023, the BoJ is still expected to be cautious at the September meeting, with the next rate rise not expected untl December.
While every effort has been made to verify the accuracy of this information, EXT Ltd. (hereafter known as “EXANTE”) cannot accept any responsibility or liability for reliance by any person on this publication or any of the information, opinions, or conclusions contained in this publication. The findings and views expressed in this publication do not necessarily reflect the views of EXANTE. Any action taken upon the information contained in this publication is strictly at your own risk. EXANTE will not be liable for any loss or damage in connection with this publication.
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