Analysts at Rabobank offered their outlook for the day ahead.
Key Quotes:
“Data-wise today sees another look at German Q2 GDP (consensus: 0.5% q-o-q) and then US durable goods orders for July, seen -1.0% m-o-m and 0.5% ex-transport.
For the rest of the day we can expect central bankers at Jackson Hole to try to show that they are still the real masters of black-comedy as they try to show that:
the policies they have put in place haven’t contributed to the political okh un vey we are now in; and
that they know how to get us out of it without making it all worse.
In particular, the Fed’s Powell will be in the spotlight as he tries to talk the Fed’s credibility up while not seeing EM FX melt-down. His speech title today is “Monetary Policy in a Changing Economy” – will it imply that the changes require a lower level of Fed Funds than in the past? Or is the best response to all that change to cling to what you do know? In which case, with headline CPI well over 2%, unemployment at a cyclical low, and the fiscal deficit at a cyclical high, now is the time to signal that we have two hikes this year and plenty more in 2019 to ensure you go beyond mere neutral, wherever that now lies.
In which case, EM FX will likely meltdown, including in China, trade wars will probably escalate, and this global black comedy really gets a little too real. And who will we blame then?”
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