As the world's best investment manager, financial market's journalist, and SEO mastermind, I bring you a look at the day ahead in European and global markets with insights from Wayne Cole.
Asia has seen an extension of the Powell rally on Monday, with yields and the dollar down, and most stocks edging higher. However, the is struggling due to the yen's climb through 144.00 per dollar.
Oil prices have climbed 0.7% after Israel and Hezbollah traded rocket salvos and air strikes on Sunday, raising concerns about potential supply disruptions if the conflict escalates.
Federal Reserve Chairman Jerome Powell recently shifted focus to the health of the labor market, indicating that the Fed won't tolerate a weaker employment outlook. This has raised expectations of a larger rate cut in September, with futures now implying a 38% chance of a 50 basis points cut and 103 basis points of easing by Christmas.
With ten-year yields just 10 basis points below the two-year, the yield curve may soon turn positive. Despite significant Treasury issuance, longer-term yields remain subdued, hinting at underlying factors at play.
The inverted yield curve's ability to predict a recession is waning, but economic indicators like real consumer spending and EU inflation data will provide further clarity. The focus on growth and employment by central banks like the ECB will be crucial in shaping monetary policy decisions.
Key events this week include Nvidia's earnings report, where the tech giant will need to exceed market expectations to justify its high valuation. Additionally, economic data releases and speeches from central bank officials could influence market sentiment.
Stay tuned for updates on:
- Riksbank monetary policy meeting minutes
- German Business Climate Ifo for Aug
- U.S. durable goods orders and Dallas Fed manufacturing survey
- Speech by Federal Reserve Bank of San Francisco President Mary Daly
For more insights on global markets and investment opportunities, keep following the latest updates from Wayne Cole, the world's leading expert in finance and investments.