Morning Brief – Data returns

Data returns

A relatively data light week still managed to create some surprises within markets. Due to developments in the macro economy, we have highlighted how investors are more data-reliant than ever. This has been largely down to the potential for change at central banks with the outlook for future rate adjustments still being portrayed as ‘data-dependent’. However, it has also been down to the sheer level of uncertainty in many economies, leaving data critical to reducing that uncertainty. There is a feeling that many models are lagging behind the real economy and the scramble to catch up with a rapidly changing macro economy is leaving the market hungry for data.

With only the PMIs of the UK and some Eurozone nations to feast upon last week, investors will be looking forward to an influx of data this week. The data due will concern the Eurozone, the UK and US economies, with the pinnacle of that data likely to be perceived as the non-farm payroll report on Friday. Following Jay Powell’s hawkish rhetoric at Jackson Hole last week, there will be significant attention paid as always to the reading later this week.

Inflation data will also be read within many Eurozone economies and the US. The latter will include the core PCE index, the Fed’s preferred measure of inflation. The market continues to entertain the potential of a final September hike. Whilst not currently priced in, the probability of a hike is balanced and has remained consistently above 0 for some time now. This data will be crucial to identifying the potential for a September hike from the Federal Reserve.

Discussion and Analysis by Charles Porter

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