The upcoming week promises to be crucial for global financial markets, with key economic events that could shape the near-term outlook. Central to this will be the release of the U.S. Consumer Price Index (CPI) inflation data, a vital indicator for the Federal Reserve’s monetary policy trajectory. Additionally, attention will be on the European Central Bank (ECB), which is anticipated to announce another rate cut as it navigates the challenges of cooling inflation and a sluggish economy. These events, coupled with data releases from China and other regions, will drive market sentiment and determine investor strategies in the days ahead.

Week in Review (Last Week)

Last Week:

• US Employment Situation Report for August:
  • 142,000 jobs added (up from July’s 114,000 but below market expectations of 160,000).
  • US Treasury yields and the dollar fell.
  • Markets priced in 120 basis points of cuts by year-end and 40 basis points for the September meeting.
  • Average hourly earnings rose +0.4% MoM (+3.8% YoY).
  • Unemployment rate dropped to 4.2%.
• Federal Reserve President John Williams and Governor Christopher Waller emphasized the need for rate cuts, noting that the economy was stabilizing and inflation was trending towards 2%.

End of Week Summary:

• S&P 500 down more than 4%.
• Markets reduced expectations for rate cuts: pricing in 32 basis points of cuts in September and 114 basis points by year-end.

Week Ahead (September 9-15, 2024)

Monday, September 9:

• Focus on Chinese CPI and PPI data, which could trigger market movements following Friday’s US data.
• Minor data releases during the rest of the day.

Tuesday, September 10:

• UK employment data to be released, with a focus on Sterling.
• Bank of Canada Governor Tiff Macklem speaks from London.
• Update from US Federal Reserve’s Michael Barr.

Wednesday, September 11:

• Key US CPI inflation data to be released (expected to ease YoY inflation).
• UK GDP data in the morning.
• Crude oil inventory report.
• Focus on US CPI data to drive market direction.

Thursday, September 12:

• European Central Bank (ECB) expected to cut rates by 25 basis points.
• US Producer Price Index (PPI) data scheduled.
• ECB press conference to provide economic outlook.

Friday, September 13:

• US University of Michigan Consumer Sentiment and Inflation Expectations data to be released.
• Focus on upcoming Chinese Industrial Production and Retail Sales figures over the weekend.