The week ahead focuses on critical updates from the Reserve Bank of Australia (RBA), Swiss National Bank (SNB), and U.S. Personal Consumption Expenditures (PCE) data. Last week, the Federal Reserve initiated a rate cut of 50 basis points, shifting its focus to employment risks. The Bank of England held its rates, emphasizing a cautious approach, while the Bank of Japan maintained its policy rate. This week, markets anticipate the RBA to keep rates steady, with Australia’s inflation data and potential rate cuts from the SNB in focus. U.S. PCE inflation and GDP data will provide further economic insights.

Events from Last Week:

• US Federal Reserve (Fed):
  • The Fed initiated its easing cycle with a 50 basis point (bps) rate cut, reducing the overnight rate to 4.75-5.00%.
  • This marked the first rate cut since early 2020, driven by a shift from inflation concerns to employment risks.
  • The S&P 500 reached a record high of 5,733, and the US Dollar Index hit a year-to-date low of 100.21.
  • Upcoming data, especially employment reports, will be key to future rate decisions, with markets pricing in a potential 25 or 50 bps cut in November.
  • Fed members projected another 50 bps cut by year-end, with further reductions expected in 2025 and 2026.
• Bank of England (BoE):
  • The BoE voted 8-1 to hold the Bank Rate at 5.00%, opting for a more cautious approach compared to the Fed.
  • The pound (GBP) strengthened, hitting year-to-date highs of $1.3340, with the market viewing the decision as a “hawkish hold.”
  • Core inflation and the tight labor market remain key concerns, with services inflation rising to 5.6% in August.
  • The BoE forecasts GDP growth slowing to 0.3% in Q3 2024, down from the previous forecast of 0.4%.
• Bank of Japan (BoJ):
  • The BoJ held its short-term Policy Rate at 0.25%, following a 15 bps hike in July.
  • Governor Kazuo Ueda signaled caution regarding global economic risks, with the next rate hike potentially expected in January 2025.
  • A depreciating yen could trigger earlier action from the BoJ.
• S&P 500 & US Dollar:
  • The S&P 500 hit a new record high of 5,733, while the US Dollar Index fell to 100.21, the lowest level since July 2023.

Monday, September 23:

• S&P Global Manufacturing and Services PMI (Eurozone, UK, US)
  Updates on purchasing managers’ index will provide insights into the health of the manufacturing and services sectors across these economies.

Tuesday, September 24:

• Reserve Bank of Australia (RBA) Policy Update
  The RBA is expected to maintain its current monetary stance. There’s a 93% chance rates will remain unchanged, with only a 7% probability of a rate cut.

Wednesday, September 25:

• Australian CPI Inflation (August)
  Inflation data will be key, with forecasts predicting a drop to 2.7%, down from 3.3% in July, likely signaling a stabilization within the RBA’s 2-3% target range.

Thursday, September 26:

• Swiss National Bank (SNB) Policy Rate Decision
  Markets are anticipating a rate cut, though it remains uncertain if it will be 25 or 50 basis points. The outcome may affect the strength of the Swiss franc.
• US Q2 2024 Final GDP Estimate
  The final GDP numbers for Q2 2024 will be revealed alongside weekly jobless claims and durable goods orders data.

Friday, September 27:

• US PCE Price Index (August)
  The key inflation indicator will be watched closely, with forecasts suggesting that YoY PCE inflation eased to 2.3% from 2.5% in July, while core inflation is expected to rise to 2.7%.