The S&P 500 gained on Friday as data pointed to some pockets of strength in the US economy and in the week ahead, investor focus will be on the next US stimulus plan as will a Jackson Hole speech from Fed Chair Powell on Thursday, FXStreet’s Ross J. Burland reports.
Key quotes
“The two-day Jackson Hole symposium starts Thursday and the theme is ‘Navigating the Decade Ahead: Implications for Monetary Policy’. Investors will be on the look-out for any indications that the Fed is close to adopting Average Inflation Targeting and to better understand the conditions that would prompt Yield Curve Control.”
“For the reflation and declining real yields narrative to keep stocks elevated the market will want to see signs that the Fed will keep rates low and is prepared to do more.”
“The House approved legislation this weekend to allocate $25 billion to the US Postal Service and ban operational changes that have slowed mail service around the country. Saturday’s vote on the US postal service could restart negotiations of a slimmed-down stimulus deal as the House’s early return for votes on Saturday disrupted members’ August recess plans.”
“As for an update on US-China relations – the Chinese suggest a review on the Phase One deal will be taking place after all. While neither Beijing nor Washington have released a date for the talks, which were originally expected to happen around August 15, but an olive branch approach from the Chinese is good news for risk appetite heading into the week.”
“Despite a recession, stagnating profits and the prospect of a messy presidential election. the S&P 500 is hitting new highs and this will likely entice new buyers. On the other hand, however, the coronavirus is a fluid situation and the skeptics, while a dying breed of late, are lurking and waiting to pounce.”
“The index has proved highly sensitive to reports of a possible vaccine breakthrough, yet even on the most optimistic assumption. A vaccine will not be widely available until 2021 at the earliest, and the chances of failure are high.”
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