Yellen Gives Balanced Speech at Jackson Hole; Russian Aid Convoy Runs Over European Stocks

Economic Data

- (IE) Ireland July PPI M/M: -0.1% v 0.3% prior; Y/Y: -2.4% v -1.7% prior
- (EU ECB: 8 banks to repay total €1.4B in weekly 3-Year LTRO Funds vs. €3.5Be
- (CA) Canada Jun Retail Sales M/M: 1.1% v 0.3%e; Retail Sales Ex Auto M/M: 1.5% v 0.3%e
- (CA) Canada July CPI M/M: -0.2% v -0.1%e; Y/Y: 2.1% v 2.2%e ; Consumer Price Index: 125.7 v 125.9e
- (CA) Canada July CPI Core M/M: -0.1% v +0.1%e; Y/Y: 1.7% v 1.9%e
- (MX) Mexico July Unemployment Rate NSA: 5.5% v 5.0%e; Unemployment Rate (Seasonally Adj): 5.2% v 4.8%e
- (CL) Chile July PPI M/M: +2.6% v -0.7% prior
- (BR) Brazil July Current Account Balance: -$6.02B v -$5.8Be; Foreign Direct Investment (FDI): $5.9B v $5.4Be

- Fed Chair Yellen has spoken and markets are reacting calmly to her balanced, pragmatic remarks. The yield on the ten-year UST has risen to match the 2.44% level seen in the wake of Wednesday's FOMC minutes release while the dollar is broadly stronger. Equity markets have been choppy: after popping into positive territory after Yellen's remarks, the DJIA is now down 0.25%, the S&P500 is down 0.17% and the Nasdaq is down 0.12%.

- The open debate within the Fed on the US job market was put in stark definition thanks to comments out of Fed officials over the last 24 hours. Wednesday's FOMC minutes added a controversial new component: "...a range of labor market indicators suggested that there remained significant underutilization of labor resources." Both Bullard and Plosser have disagreed with the use of "significant" to describe labor resource underutilization, while Williams agreed with the characterization. In her speech this morning, Yellen said it remains unclear what the degree of labor slack is in the economy or how quickly it will dissipate.

- Before the Fed speak seized the attention of market participants, Ukraine again dominated headlines. Just ahead of the US session, the Russian humanitarian aid convoy that has been held up at the border entered Ukraine without either Red Cross or Ukraine government permission. Ukrainian security officials condemned the move as a "direct invasion" while foreign ministry officials were more circumspect, noting that the convoy would be allowed to proceed without interruption from the Ukrainian armed forces. The move had forced European indices right to their lows after 06:00ET.

Looking Ahead

- (SK) Slovakia, Denmark Sovereign Debt Rating Published by Fitch
- 12:00 (US) Fed's Lockhart on CNBC
- 13:00 (BR) Brazil July Tax Collections (BRL): 99.3Be v 91.4B prior
- 14:30 (US) ECB chief Draghi gives key speech at Fed symposium in Jackson Hole
- 15:00 (AR) Argentina July Trade Balance: $0.8Be v $1.4B prior

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