Quiet night in equities and FX
All eyes on Powell
Nikkei 0.03% Dax 0.71%
UST 10Y 0.70
Asia and the EU
North America Open
USD Durable Goods 8:30
Markets were very quiet on the second day of the trading week with equities holding a mild bid while the dollar was essentially flat.
Both the newsflow and economic release calendar were barren with price action reflecting the dog days of summer listlessness as many market participants remained on holiday.
The only point of focus this week will be Chairman’s Powell speech at the virtual Jackson Hole central bank summit with most market players anticipating that he will maintain a dovish tilt to his remarks.
The key point of interest is whether the Fed will make explicit its shift from a single rate inflation targeting of about 2% to an average inflation rate which would in effect allow it to run the economy “hot” for much longer than under the former policy regime.
A move towards average inflation targeting indicates that monetary policy will remain highly accommodative for quite some time which should provide further support for equities – especially high technology companies that are enjoying the benefits of ultra-low capital cost structures and continued organic growth.
On the eco calendar in North America today the market will see Durable goods orders which are expected to slow from the month prior but remain positive. Unless the number prints way outside of the consensus it’s unlikely to have any impact on trade and the only question for the day ahead is whether the current momentum flows can push equities to fresh highs ahead of Chairman Powell’s speech tomorrow.