Week in review
- U.S. core PCE prices steady at 0.2%m/m
- Japan consumer confidence fell to 36.7
- India GDP below expectation at 6.7% y/y
Week ahead
- U.S. ISM, JOLTs, non-farm payroll, unemployment rate
- China PMI, trade balance
- Japan household spending
Thought of the week
With Powell acknowledging that "the time has come for policy to adjust”, a September cut now appears almost certain. As policy focus at the U.S. Federal Reserve tilts towards the maximum employment side of its dual mandate, a larger debate on whether a soft landing can be achieved and the depth of upcoming cuts. Current market implied probability suggests a 30% chance of a 50bps cut. Our base case is for a soft landing at sub-2% trend GDP growth and details from the August Conference Board consumer confidence report signaled a similar message. The difference between the share of “plentiful jobs” less “hard-to-get jobs” responses edged lower but remains positive, indicating that the labour market is likely to soften but not crash. Investors may wish to revisit their investment portfolio and evaluate their duration and equity risk to better position ahead of a repricing in the macro environment.
U.S. Labour Market Conditions
Unemployment rate (lhs), Conference Board labour market differential (rhs)
Market data