Markets reverse lower, as Powell's outlook continues to dominate

Markets head south, with initial gains being met by pessimism despite improved consumer and jobs data.

Powell comments ensure bears continue to dominate 

“An upbeat European morning has soon turned swiftly around today, with the afternoon seeing sharp declines across both sides of the Atlantic. Unfortunately, markets will be at risk for some time yet, with inflationary pressures ensuring that rates remain higher for longer. With Jerome Powell hammering home the point that monetary policy will be utilised to address inflation rather than potential employment or growth concerns, todays 50-year high for German CPI served to highlight the pressure on the ECB when they meet next month. Unfortunately, the story is no better in the UK, with Goldman Sachs warning that we could see inflation reach a whopping 22% next year if natural gas prices remain elevated. ”

US consumers see reasons to be cheerful 

“Today’s US consumer confidence survey brought a welcome boost for the Fed, with the August reading of 103.2 surprising even the most optimistic forecaster. Despite the evident fears around energy prices and inflation, the survey saw a rise in the number of those that consumers that consider conditions to be “good”. From a employment perspective, the survey saw grounds for continued optimism with just 11.4% of consumers considering jobs ”hard to get”. That theme was reiterated by a welcome jump in the JOLT job opening figure, which followed the CB confidence survey by also reversing the three-month downtrend to push sharply higher. Clearly the conditions for many have improved in August, helping to alleviate fears of a downbeat jobs report on Friday.”