Weekly Macro Matters
Macro Matters – Weekly review, w/c August 14
Markets are grappling with the uncertainties of a disinflationary path and the staying power of the USD rally. While US inflation shows signs of easing, mixed data and Fed hawkish rhetoric maintain market volatility. Meanwhile, global risk appetite faces challenges from China’s property market woes and cautious central bank policies.
Macro Matters – Weekly Review, w/c August 14
Macroeconomic / Geopolitical Developments
• The Uncertainties of Disinflation: US inflation is easing, with core CPI falling to 4.7%, but mixed data like rising PPI and hawkish Fed comments keep the path uncertain. Despite expectations of a pause in September, the Fed’s commitment to curbing inflation may surprise markets in the coming months.
• USD Rally Persists: The Dollar Index has surged over 3% from July lows, supported by the US economy’s soft landing narrative. Global economic concerns, including China’s slowdown, keep the USD as a preferred safe haven despite disinflationary trends.
United States
• Fed Guidance Under Scrutiny: Comments from FOMC members and the release of meeting minutes this week will clarify the Fed’s stance. Hawkish signals, such as Mary Daly’s remarks about inflation risks, could drive market volatility.
• Safe Haven Flow Increases: Outflows from US equities and into bonds and cash reflect cautious positioning. This risk-averse sentiment is also weighing on US index futures, with the e-mini S&P 500 nearing key support levels of 4411. A breach could indicate a deeper correction.
Europe
• Bank of England Under Pressure: UK wage growth and inflation data this week will shape expectations for BoE policy. While core and headline CPI are projected to drop, persistent services inflation keeps rate hike expectations intact.
• EUR Struggles for Direction: With little positive news from the Eurozone economy, the EUR/USD remains capped below 1.1000 as USD strength dominates.
Asia-Pacific
• China’s Property Market Concerns: Mounting defaults in China’s property sector raise global contagion risks. Measures like refinancing bonds for local governments may not be enough to stabilize sentiment.
• RBA and RBNZ Policy Focus: Australian wage growth and unemployment data this week could signal the RBA’s next move, while the RBNZ is expected to hold rates steady at 5.50%.
Commodities
• Oil Futures Break Higher: NYMEX oil has closed above key resistance at $83.53, with momentum suggesting further gains toward $90. A close below $79.90 would negate this bullish outlook.
• Gold Futures Test Key Support: USD strength continues to weigh on gold, which is approaching the June low of $1892.50. A breach could open the door to a deeper correction toward $1808.
On the Calendar
• Key Events:
• RBNZ monetary policy decision (Aug 16).
• US Retail Sales and Industrial Production data (Aug 15–16).
• UK wage growth, CPI, and Retail Sales data (Aug 15, 16, and 18).
• Chinese Industrial Production and Retail Sales (Aug 15).
• Macro Data:
• Aug 15: Australian Wage Price Index, UK Unemployment, German ZEW, Canadian Inflation.
• Aug 16: US Building Permits, Housing Starts, FOMC minutes.
• Aug 17: Australian Unemployment, Philly Fed Manufacturing.
• Aug 18: UK Retail Sales, Eurozone Final HICP Inflation.
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