I think each day that remains this week offers the global markets something genuinely important. Today the Fed releases minutes from its last meeting. The Bank of England Monetary Policy Council (MPC) minutes came out in London and showed two members wanting to raise rates. That’s the first time since 2011, three years ago. Rounding the global macro outlook out with Latin flavor, the Banamex (Bank of Mexico) Survey of Economists will hit.
After the publication of the Fed minutes, the extraordinarily low level of the U.S. 10-year rate at 2.40%, and the German Bund’s 1.0% record low rate, could move back up. Stocks may not care.
On Thursday, the world that doesn’t speak English gets fresh paint. China’s Flash HSBC/Markit PMI for manufacturing comes out. Consensus looks for 51.5. The month’s prior reading was 51.7. Both the German flash manufacturing and services PMI comes out. Consensus expects 51.5 for manufacturing and 55.5 for services. The same PMI data come out for France. The French flash manufacturing PMI is not looking good. Expectations are for 47.8, identical to last month.
Thursday PMIs have the most potential to surprise the bulls this week. I would keep a close eye on the German PMI and the Chinese PMI.
This week is also prime time for central bankers. The Federal Reserve Bank of Kansas City holds its Economic Symposium in Jackson Hole, Wyoming, a conference for central bankers. It runs to Saturday, August 23rd. This year’s theme is “Labor Market Dynamics.” On Friday, both Janet Yellen and Mario Draghi speak at the Jackson Hole conference. Janet Yellen is most likely to be upstaged by Mario Draghi at this year’s Jackson Hole meetings. If Mr. Draghi announces novel monetary policy for Europe, or takes live questions, the week will end with a bang.
The Mexican unemployment rate is also out on Friday. There is no reason to think this macro data will play any role outside of Mexico. All eyes, even Latin American ones, will remain on Super Mario.
John Blank
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