During a week in which it was announced that the hot, dry summer had forced an early start to the Champagne harvest in France, it seemed that any fizz remaining had certainly come out of the recent market rally.
It was actually in France where the bad news started, with the Eurozone’s second largest economy and several others in the bloc reporting a mixed set of both manufacturing and services PMI data. The numbers were slightly better on domestic shores, as the services sector’s reading came in at 52.5 vs consensus estimates of 51.5, vitally still showing that the largest part of the UK’s economy is still in expansion territory. However, it is worth mentioning that Manufacturing PMI came in well below consensus and is now seen to be contracting.
Data released from the US during the middle of the week showed that the US Federal Reserve’s rate hikes had perhaps put a cork in the housing market for now, with pending home sales down 12.6% on a seasonally adjusted basis. However, whilst the numbers were poor, with house prices remaining elevated amid a critical shortage of previously owned properties, a complete housing market collapse similar to the one experienced in 2008/9 is very unlikely.
Although the housing data covered every post code in the US, there was one address that markets has been waiting on all week.
The relatively uninhabited frontier town of Jackson, Wyoming was named in late 1893 by Margaret Simpson, who, at the time, was forced into receiving other people’s mail at her home address as there was no post office for miles around. Giving the area a name in order for those correspondents in the eastern states to be able to send mail west, she chose the renowned animal trapper and frontiersman “Davy” Jackson, one of the first European settlers to have ever spent a whole winter in the area, as her inspiration.
With the “Hole” added later to describe the mountainous valley the town is situated near, Jackson Hole is now not only a top tourist destination, but also a destination for the world’s top financiers. The week that was, acted as something as a countdown to the annual Jackson Hole Symposium, with this year’s edition arguably being the most anticipated for a while. Against a backdrop of soaring inflation and a cost of living crisis blighting most western economies, central bankers, finance ministers and academics from around the world have all gathered to discuss various economic issues.
With markets treading water for the majority of the week, Friday will see Fed Chair, Jerome Powell, address the conference, with his words heavily scrutinised for any indication that an economic slowdown might alter the central bank’s strategy and if an economic "soft landing" can be achieved. It seems that much like the aforementioned Ms Simpson’s postman, central banks will also have a lot to deliver in Jackson Hole…
With the events of the Jackson Hole Symposium possibly setting the tone for the coming week, those in the UK will have an extra day to digest all the news coming from Wyoming, as the Summer Bank Holiday ushers in a long weekend.
After a subdued start to the week on domestic shores, the Bank of England will release its monthly mortgage approval figures. With the central bank looking to cool the housing market through raising rates more aggressively, it will be interesting to see if the moves are starting to have the desired effect. The data will highlight the number of new mortgages approved for home purchases and acts as a useful way of measuring the strength of the housing market.
Tuesday will also see news from the US as two intertwined pieces of data are released in the form of consumer confidence and job openings releases. With a red hot labour market to contend with, those at the US Federal Reserve will be keeping a close eye on any trends that may be emerging, especially in the difficulty companies are having finding suitable candidates, often having to pay more to attract the talent they need.
Staying in the US, the first Friday of the month often sees the Bureau of Labor Statistics releases the nation’s Non-farm Payroll numbers. A key piece of information when determining the US central bank’s next rate move, it provides plenty for economist’s to get their teeth stuck into. Acting as a key metric for the US labour market, the data will be accompanied by Average Hourly Earnings, allowing us to gauge future inflation expectations as the more consumers earn, the more they tend to spend, a phenomenon that will be watched very closely by US Federal Reserve.
The information in this blog or any response to comments should not be regarded as financial advice. If you are unsure of any of the terminology used you should seek financial advice. Remember that the value of investments can go down as well as up, and could be worth less than what was paid in. The information is based on our understanding as at 26 August 2022.