Two major events in this US this week steals the show on the market agenda:
Held online due to the coronavirus pandemic, the annual Jackson Hole meeting of central bankers, and the four-day Republican national convention where President Donald Trump will agree to be nominated again for the White House are on top of the agenda.
Donald Trump will be officially nominated as the Republicans’ presidential candidate on the first day of the party’s national convention held in Charlotte, North Carolina. But due to the pandemic, Trump will be delivering his acceptance speech live from the White House on Thursday. The Democrats’ convention was held last week, and Joe Biden was officially nominated to take down Trump come November 3 presidential elections.
Vice President Mike Pence will give a speech from Fort McHenry in Baltimore on Wednesday.
Trump is looking for a second four-year term, but he is behind Democratic candidate Biden in public opinion polls both nationally and in many different states. Trump insists he is laying the groundwork for winning and finds the polls unreliable.
Jackson hole summit
Major central bankers will meet online to discuss the unprecedented economic conditions they face at the annual Jackson Hole symposium on Thursday.
Key speakers for the two-day event includes Jay Powell from the US Federal Reserve, Andrew Bailey of the Bank of England (BoE) and European Central Bank (ECB) chief economist Philip Lane.
Powell will deliver the keynote speech for the central bank summit which until last year used to be held in the scenic town of Jackson Hole in the mountainous state of Wyoming. Investors will seek more clarity about the tools that the Fed is considering not only to limit the economic damage caused by the pandemic but also to address the problem of persistently low inflation.
Several Fed officials have already expressed their willingness to let inflation stay above the 2 percent target to compensate for prolonged periods of decline.
Minutes from the Fed’s July meeting released last week suggested caution over yield curve control. Economists are looking for more details on this issue. Another issue that the market is curious about will be signs of what more the Fed can do to support the global economy if the Congress divided along partisan lines and in dispute with the White House fails to pass a new stimulus package.
ECB’s Lane will talk about monetary policy and the Eurozone’s economic outlook as investors search for signs of when the bank might increase its 1.35 trillion euro emergency bond purchase program.
Economists will want to hear his thoughts on the possibility of the BoE’s probable plans for negative interest rates when Bailey speaks on Friday.
Bailey stated this month that negative interest rates were “part of our toolbox,” but the central bank has no immediate plans to use them.
On the macro side, we’re following three key gross domestic product reports this week.
The US comes first. According to the data to be released on Thursday, the world’s largest economy is expected to have contracted by at least 32 percent in the second quarter due to the socio-economic restrictions put in place contain the Covid19 plague.
But first, on Tuesday, Europe’s powerhouse Germany will announce its second-quarter GDP results. The EU’s leading country is expected to have contracted by more than 10 percent. France, another European giant, announces its GDP data on Friday.
Important For the watchers of the Swiss franc, Switzerland’s second-quarterly GDP figures are set for release on Thursday.
Canada’s second-quarter GDP figure, forecast at a record major contraction, is set to be published on Friday.
In the international arena, the China-US trade, technology, and geopolitical conflicts continue to occupy the agenda. Bytedance, the owner of the TikTok which the Trump administration has decided to ban on the grounds it is working for the Chinese Communist Party, is filing a lawsuit in the US courts with statements of support from the Chinese Ministry of Foreign Affairs against the executive decision by the White House.
Chinese People’s Liberation Army (PLA) is conducting military drills in waters south of the Hainan Islan in the disputed South China Sea on August 24–29 in a sing of intimidation towards its ASEAN neighbors, as the US continues to strongly side with Indonesia, Brunei, the Philippines, Vietnam, and others.
US Secretary of State Mike Pompeo is going on a regional tour including Sudan and Bahrain after Israel signed a peace and recognition agreement with the United Arab Emirates.
The Belarusian crisis in Eastern Europe grows bigger. Alexander Lukashenko, who has ruled the country with an iron fist since 1994, personally took up arms against the massive popular protests in the capital Minsk, while negotiations continue on the fate of the former Soviet republic on the Moscow-Washington-Brussels line.
US Deputy Secretary of State Stephen Biegun is visiting Belarus’ neighbors Lithuania, Russia, and Ukraine to ostensibly seek a political solution.
On the other hand, the European Union, whose relationship with the US has been damaged under the Trump administration, has a visitor from China. Chinese Foreign Minister Wang Yi will visit European capitals, including Berlin and Paris, from August 25 to September 1, ahead of next month’s China-EU trade summit.
Tuesday: Switzerland Employment Level, German GDP, German Ifo Business Climate Index, German Business Expectations, German Current Assessment (Aug)US CB Consumer Confidence, US New Home Sales
Wednesday: US Core Durable Goods Orders, USD Crude Oil Inventories
Thursday: Switzerland GDP, US GDP, US Initial Jobless Claims, US Fed Chair Powell Speaks, USD Pending Home Sales
Friday: Canada GDP, BoE Gov Bailey Speaks