Markets, the main week is just around the corner: between uncertainty from the European Central Bank and inflation in the US

Markets, the main week is just around the corner: between uncertainty from the European Central Bank and inflation in the US

For financial markets, next week is expected to be hot. Two of the most anticipated events, from one side of the Atlantic to the other: The first is to publishUS inflation For the month of August (on the agenda for Wednesday, September 13) and the second is European Central Bank meeting (Thursday, September 14).

US Inflation, latest useful data from Powell & Co

US inflation, due next Wednesday, is a highly anticipated figure because it represents the last important macroeconomic indicator before the Federal Reserve meeting scheduled for September 20. “Expectations indicate an acceleration in the overall figure Against the backdrop of rising gasoline prices, While the “core” component is expected to continue in the slowdown phase“, confirmed the strategists MBS Capital Services. Since the Jackson Hole symposium at the end of August, Fed Chairman Jerome Powell has emphasized a data-driven approach. “In the upcoming meetings, we will consider the overall data and the evolution of risks,” and “on this basis, we will decide with caution.”

Meanwhile, some ideas arrived yesterday from… beige Book, The report on economic conditions in the United States, which is published by the Federal Reserve eight times a year, highlighted how economic activity in the United States has remained almost unchanged in recent weeks. In particular, it was found that “consumption expenditures remained mostly flat, while the travel and tourism sector witnessed some improvement.”

While waiting for the Fed meeting, there is still a lot of uncertainty about the direction it will be taken, and this also shows from some of the comments. John Williams, President of the Federal Reserve Bank of New York, shared his view on the current state of inflation. “Inflation is moving in the right direction and I think interest rates are appropriate right now,” Williams said in an interview with Bloomberg, repeating the mantra that the central bank will continue to closely monitor new economic data ahead of the FOMC meeting. Dallas Fed President Lori Logan added, “Another period of time in interest rate increases may be appropriate. However, a pause does not necessarily mean that there will be pauses in interest rate increases in the future.”

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trend monitoring FedWatch is compiled by CME GroupIn September, interest rates should remain stable in the range of 5.25%-5.5% with a probability of 93%, while the probability that the Fed will increase the cost of money by 25 basis points in November is 37.2%, up approximately 4 percentage points compared to the week. the previous.

Testing the European Central Bank, the results of the meeting are more ambiguous than ever

Before the Fed meeting, there is the meeting with the European Central Bank led by Lagarde. A meeting that comes after a series of weak data: Those published since the July meeting have highlighted a type of stagflation scenario in the eurozone, with confidence indicators falling and inflation remaining high. A complex mix, which will make the European Central Bank’s decision next week far from easy. In July, President Christine Lagarde herself left the door open for a September meeting, with the possibility of another meeting or a break.

The outcome of the meeting is more uncertain than ever, and this can also be seen from the Bloomberg consensus “You see economists split in half between those who expect interest rates to remain stable and those who instead estimate a 25-point rate increase (this latest move is priced at 38% probability by the swap market),” they state again from Mps Capital Services. , according to which the market underestimates the eventual rise scenario taking into account that inflation (especially core inflation) remains at high levels and this should partly be reflected in the new economic estimates that will be announced at the meeting.

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Those who expect a new tightening at next week’s meeting are Carsten Brzeski, Global Head of Macro at ING. “We still expect a final rate hike at next week’s ECB meetingThe expert explains, admitting that the discussion will be heated and complex among members (Board of Directors). He adds: “In any case, we do not expect the European Central Bank to announce the end of the interest rate hike cycle before the end of the year.”

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