Key news from the US came from FOMC minutes where clearly the Fed is looking at QE as the bias amongst FOMC members clearly sits in the dovish stance with only the perma bull Jeffrey Lacker who is neutral – hawkish in his view. The strength of the US economy remains disappointing with existing home sales figures at 4.47m sales versus a market expectation of 4.52m with it trending back down but still above the September 2010 lows. All eyes on next weeks Case Schiller Index out on Tuesday.
ECB has been concerned, on reports that the ECB is planning to cap peripheral bond yields by promising unlimited purchases of debt on secondary markets. ECB has not denied it but have said it is wrong to speculate on future ECB bond interventions and attention will be paid to ECB’s President Draghi’s speech on this coming Saturday at the Jackson Hole Symposium.
News from China has also highlighted that the world’s second largest economy continues to show weakness in its manufacturing sector as the HSBC Flash Manufacturing PMI was 47.8 which is the 10th consecutive month of contraction in Chinese manufacturing which has opened the way for possible further stimulus from Beijing.
THE WEEK AHEAD
Monday: EUR German IFO Business Climate, US FOMC Member Pianalto Speaks
Tuesday: EUR GFK German Consumer Climate, EUR M3 Money Supply, **US S&P / CS Composite-20 HPI, US CB Consumer Confidence
Wednesday: EUR German Preliminary CPI, US Prelim GDP, US Pending Home Sales, US Crude Inventories, US Beige Book
Thursday: EUR German Unemployment Change, EUR Italian 10yr Bond Auction, US Unemployment Claims, US Core PCE Price Index, US Personal Spending, 3 Day Jackson Hole Symposium
Friday: EUR German Retail Sales, EUR CPI Flash Estimate, EUR Unemployment Rate, US Chicago PMI, US Revised University of Michigan Consumer Sentiment, *** US Fed Chairman Speaks, China Manufacturing PMI (Fri/Sat)
Saturday: ECB President Draghi Speaks