Manufacturing data is constantly bringing bad news, once again sparking market concerns about the economic outlook in the USA.
① The ISM Manufacturing PMI has been below 50 for the fifth consecutive month, which means that manufacturing economic activity has been cooling down for five months in a row; ② S&P Global's August Manufacturing PMI was revised down from 48 to 47.9, originally expected to be adjusted to 48.1. In July, this number was 49.6.
Will tonight's ISM manufacturing index set the tone for global markets this week?
As the first important economic indicator of the week announced, the ISM Manufacturing Index is expected to be in contraction range for the fifth consecutive month. Bank of America believes that if the ISM Manufacturing Index is above 49, it may push the 30-year US bond yield to above 4.3%.
The entire market focuses on non-farm, be careful of the 'backfire' of inflation.
Deutsche Bank believes that considering the global increase in money supply growth, sticky inflation, geopolitical risks, and the need for greater fiscal stimulus for higher post-pandemic real yields, it is still too early to dismiss inflation risks.
The Federal Reserve's interest rate cut is getting closer, and asset management giants are restructuring their positions and increasing their bets on emerging market assets.
Several of the top-performing emerging market bond management companies are repositioning their portfolios, as the highly anticipated interest rate cuts in the United States in decades have brought new momentum to asset classes that have suffered nearly $15 billion in outflows this year.
Weekly U.S. Economic Data Roundup: Year-ahead Inflation Expectations at 2020 Levels
USA's July PCE inflation rose moderately, paving the way for a rate cut next month.
①In July, the overall PCE price index increased by 2.5% year-on-year, with an expected 2.6%; the month-on-month increase was 0.2%, in line with expectations. ② The impact of this report may be insignificant, but it does confirm what Fed Chairman Powell said, with the focus potentially being on employment trends, as people believe that the inflation trend may continue towards the 2% target.
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50 basis points to start an interest rate cut cycle? The Federal Reserve has never done this before.
Deutsche Bank believes that if the labor market remains stable, the Federal Reserve may choose to gradually reduce interest rates by 25 basis points, and will not reduce interest rates sharply all at once.
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Fed's Powell: Inflation still poses upside risks, but supports a 25 basis point rate cut next month.
①Baljan pointed out that he tends to take a more cautious approach to interest rate cuts, gradually adjusting policies by observing market and economic reactions; ②The practice of "lower hiring, lower firing" currently adopted by American companies is unlikely to continue.
Did the significant interest rate cut by the Federal Reserve boost risk assets? Historical results are counterintuitive.
In the history of modern finance, there have been 14 complete cycles of the Federal Reserve. Although the market's reaction to interest rate cuts may vary at different times, there are some obvious trends: when the Federal Reserve cuts interest rates quickly, the market performance is worse compared to a gradual interest rate cut scenario. In the scenario of rapid interest rate cuts, within one year after the first interest rate cut, the maximum drawdown is twice as much as in the scenario of gradual interest rate cuts.
The Federal Reserve is "in position"! The global easing curtain is expected to open a new chapter next month.
Last Friday, officials from the three major central banks of the United States, the United Kingdom, and Europe coincidentally stated that they will enter an interest rate cut cycle in the coming months or continue the previous rate cut pace. This indicates that as the global economy gradually emerges from the post-pandemic period of high inflation, the era of high global borrowing costs is about to end, and the loose monetary policies of major central banks are also expected to usher in a new chapter next month.
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On the eve of the Jackson Hole meeting, Federal Reserve officials are sounding dovish, expressing strong support for an early rate cut.
Officials still emphasize the health of the US labor market and economy, but advocate for gradually starting to reduce interest rates as soon as possible.
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The key clues to the Fed's end of balance sheet reduction need to be found in tonight's Fed minutes?
As the discussion on when the Federal Reserve will end its current quantitative tightening (QT) policy continues to heat up on Wall Street, market strategists are hoping to gain more guidance from the Fed minutes to be released tonight; While most market observers currently predict that the Fed will completely end its balance sheet reduction at some point towards the end of this year, the specific timing has yet to be determined.