Market movers ahead
- In the US we now believe that the stress in emerging markets will be enough for the Fed to postpone its first rate hike from September to December. Next week the FOMC members will have the opportunity to communicate their views in connection with the Jackson Hole central bank conference.
- In China more monetary easing appears imminent but the People’s Bank of China’s ability to keep the exchange rate in a tight grip could also be questioned.
- Resilient German manufacturing PMI suggests that next week’s ifo will show an improvement and that the spill-over from the EM turmoil so far has been modest.
- In Norway the Oil Industry Investment Survey for Q3 will give an early indication on how much lower oil prices have started to weigh on the Norwegian economy.
- In Sweden the revised inflation forecast from NIER could prove interesting because NIER’s current inflation forecast is substantially below the Riksbanken’s.
Global macro and market themes
- The scale of the current emerging market crisis is wider than the EM scares in 2013 and 2014 and hence a real cause for concern.
- Weak Chinese data add to depreciation pressure on CNY and it is too early to call the bottom for emerging market currencies.
- Uncertainty and continued decline in commodity prices is expected to keep the downward pressure on bond yields intact in the short term.
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