Welcome to September! The summer volatility is finally over. In the week ahead, we can concentrate on economic data rather than earnings data. However, today is Labor Day in the U.S., a public holiday, so let me remind readers that at Jackson Hole, Jerome Powell said that the "time has come for policy to adjust" and that the timing of rate cuts "will depend on incoming data." That data comes thick and fast this week, and there are currently 32 bps of cuts priced in for the September meeting. He also placed extra emphasis on the labor market, stating that they would "not seek or welcome further cooling in labor market conditions."
Ahead of Friday's NFP, on Tuesday we have the JOLTS job openings for July, and on Thursday, the ADP employment report will be published. Alongside this, we get data on Nonfarm Productivity and Unit Labor Costs for Q2. Away from employment data in North America, we also hear from the Bank of Canada on Tuesday, and the overnight index swaps (OIS) suggest that a third consecutive quarter-point cut will be delivered. After the July meeting, the monthly GDP data revealed that the economy slowed in May from April and approached stagnation in June. This is combined with an employment report that revealed a greater loss of jobs in July compared to June.
The other data point of note this week will be Australia’s GDP data for Q2 on Wednesday. Rates are at 4.1%, and when the RBA last met, they said they were willing to tighten policy as inflation remains elevated. Yet, 25 bps of cuts are priced into the year-end curve.
As for today, the data is very much second-tier: Swiss Retail Sales, Turkish GDP, and European Manufacturing PMIs are the highlights. But get ready for the rest of the week—it's going to be a cracker. Good luck, and welcome back to normal market conditions!
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