Key Events This Week: All Eyes On Jackson Hole

This week's calendar is relatively sparse, nevertheless the flash PMIs across the globe, the latest FOMC policy meeting minutes and the final Q2 GDP for Germany should give markets something to look out for. The key highlight will be the Jackson Hole meeting which begins on Friday. Elsewhere Turkey, which is on a one week holiday, and the rest of the EM complex will stay in focus and expect plenty of headlines as we approach the restarting of US/China trade talks towards the end of the month; as a reminder the US tariff deadline on Chinese products is August 23.

As DB's Craig Nicol writes, the release of the flash August PMIs across the globe on Thursday is the key highlight. We'll see the manufacturing print for Japan early in the morning followed by the manufacturing, services and composite readings for Germany, France and the Eurozone, and then the same for the US in the afternoon. In terms of what to expect, the current market consensus is for a slight improvement in Europe. The Eurozone manufacturing reading is expected to nudge up 0.2pts to 55.3. The services print is also expected to rise 0.3pts to 54.5 and the composite to rise 0.2pts to 54.5. In the US the manufacturing PMI is expected to fall 0.3pts to 55.0 which would be the lowest in 8 months and the 4th monthly decline. Expect the market to be focused on some of the prices components of the data, as well as more-trade sensitive components like new orders given the softness in the August Philadelphia Fed Business Outlook.

In the meantime, we will be getting the minutes of the latest FOMC monetary policy meeting on Wednesday. While the original meeting on August 1 was largely uneventful, the minutes could be more closely watched to get further colour on the discussions between the FOMC members over growth, inflation, yield curve inversion and trade wars.

With regards to other economic data that’s due out next week in the US we’ll get a few important releases towards the end of the week. On Friday, we will get the flash July durable and capital goods orders data (+0.5% mom durable goods ex  transportation print expected). Other data in the US next week includes July existing home sales on Wednesday, July new home sales, the 2Q house price purchase index and Kansas City Fed PMI on Thursday.

A summary breakdown is below:

In Europe, we will get final Q2 GDP for Germany on Friday. As a reminder the preliminary print came in one-tenth higher than expected at +0.5% qoq and the expectation is that it will stay steady at +0.5% qoq. Other data releases worth highlighting next week in Europe includes July PPI for Germany (expected +0.4% mom) and June construction output for the Euro area on Monday, July public finances data for the UK on Tuesday, latest ECB monetary policy minutes, August Business confidence and manufacturing confidence for France along with France's survey of industrial investment on Thursday and finally July PPI for Spain on Friday.

In Asia, the data releases of note are July CPI and services PPI for Japan on Friday along with final July machine tools orders on Tuesday.

Away from data, Fed Chair Powell will be speaking on the economy and monetary policy at the Jackson Hole central banking symposium on Friday where this year's topic is “changing market structure and implications for monetary policy.” Atlanta Fed President Raphael Bostic will discuss the U.S. economic outlook at the Bristol Chamber of Commerce on Monday. Meanwhile, the US might impose new sanctions on Russia for a March 4 nerve-agent attack in the U.K. on Wednesday and will start imposing 25% tariffs on an additional $16 bn of Chinese imports from Thursday which China has vowed to retaliate with equal measures.

The earnings of note during the week are Lowe's and Target on Wednesday, with Intuit, HP, and Alibaba reporting on Thursday.

Key events by day courtesy of Deutsche Bank

  • Monday: Its a fairly light start to the week. There are no data releases of note in Asia. In Europe, we get the August Rightmove house prices for the UK, overnight followed by the release of July PPI for Germany in the morning along with release of the June construction output for the euro area. There are no data releases of note in the US. Away from data, the Fed's Bostic will speak on the U.S. economic outlook in Tennessee.
  • Tuesday: Overnight we get July supermarket sales and Nationwide department store sales in Japan along with final July machine tool orders. The only release of note in Europe is the July public finances data in the UK. There is nothing of note in the US.
  • Wednesday: Overnight we get the June all industry activity index in Japan. There is nothing of note in Europe. In the US, we get July existing home sales data for the US along with minutes from the latest FOMC monetary policy meeting. Away from data, Lowe's and Target will report their earnings.
  • Thursday: It is the most data heavy day of the week with the big focus being the release of the flash August PMIs across the globe. Overnight we'll get the manufacturing PMI for Japan followed by the manufacturing, services and composite PMIs for France, Germany and the Eurozone. The US PMIs will then be out in the afternoon. Away from PMIs, in Europe, we will get the latest ECB monetary policy minutes, August business and manufacturing confidence and, production outlook for France along with the survey of industrial investment for France and advance August consumer confidence for the euro area. In the US, we get the June FHFA house price index, 2Q house price purchase index, July  new home sales and August Kansas City Fed manufacturing activity index. Away from data, Intuit, HP and Alibaba will reports their earnings.
  • Friday: Overnight we get July CPI and services PPI for Japan. In Europe, we get final 2Q GDP data for Germany, July PPI for Spain and July finance loans for housing in the UK. In the US, we get preliminary July durable goods orders and capital goods orders data. Away from data, the Fed will be hosting its annual Jackson Hole central banking symposium where Fed Chair Powell is set to discuss the economy and monetary policy.

Finally, focusing on just the US and consensus expectations, Goldman writes that the key economic data release this week is the durable goods report on Friday. There are several scheduled speaking engagements by Fed officials this week, including a speech by Fed Chairman Jerome Powell on Friday at the Jackson Hole Economic Symposium. In addition, minutes from the August FOMC meeting will be released on Wednesday.

Monday, August 20

  • 11:00 AM Atlanta Fed President Bostic (FOMC voter) speaks; Atlanta Federal Reserve President Raphael Bostic will discuss the U.S. economic outlook with the Johnson City, Kingsport and Bristol Chamber of Commerce in Kingsport, Tennessee. Audience Q&A is expected.

Tuesday, August 21

  • There are no major economic data releases scheduled.

Wednesday, August 22

  • 10:00 AM Existing home sales, July (GS flat, consensus +0.7%, last -0.6%); We look for a flat reading in July existing homes sales based on regional housing data, following a 0.6% decline in June. Existing home sales are an input into the brokers' commissions component of residential investment in the GDP report.
  • 2:00 PM Minutes from the July 31 – August 1 FOMC meeting; At its August meeting, the FOMC left the funds rate target unchanged, as widely expected. The key changes in the post-meeting statement were the upgrade to the characterization of economic activity from “solid” to “strong,” as well as an upgrade to the consumption characterization from “picked up” to “grown strongly.” The Committee also tweaked the description of headline and core inflation to “remain near 2 percent.” In the minutes, we will look for further discussion of trade policy, which was left unmentioned in the statement.

Thursday, August 23

  • 08:30 AM Initial jobless claims, week ended August 18 (GS 210k, consensus 215k, last 212k); Continuing jobless claims, week ended August 11 (consensus 1,735k, last 1,721k): We estimate initial jobless claims declined by 2k to 215k in the week ended August 18, following a 5k decline in the previous week. Initial jobless claims continue to steadily march lower, and we believe there is additional scope for this trend to continue.
  • 09:00 AM FHFA house price index, June (consensus +0.3%, last +0.2%)
  • 09:45 AM Markit Flash US manufacturing PMI, August preliminary (consensus 55.0, last 55.3)
  • 09:45 AM Markit Flash US services PMI, August preliminary (consensus 56.0, last 56.0)
  • 10:00 AM New home sales, July (GS +2.5%, consensus +2.7%, last -5.3%); We estimate new home sales increased 2.5% in July, following a 5.3% decline in the prior month. Single family starts and single-family permits increased in July, while mortgage applications declined.
  • 11:00 Kansas City Fed manufacturing index, August (consensus +22, last +23)

Friday, August 24

  • 08:30 AM Durable goods orders, July preliminary (GS flat, consensus -0.5%, last +0.8%); Durable goods orders ex-transportation, July preliminary (GS flat, consensus +0.5%, last +0.2%); Core capital goods orders, July preliminary (GS +0.1%, consensus +0.5%, last +0.2%); Core capital goods shipments, July preliminary (GS +0.3%, consensus +0.3%, last +0.7%): We expect durable goods orders to stay flat in the July report, given mixed data from commercial aircraft orders and scope for an increase in defense spending. Given a pullback in manufacturing surveys from earlier in the month, we see scope for a pause in core capital goods orders growth. Manufacturing production growth was solid in July, with a continued increase in the capex-sensitive business equipment category of industrial production. Accordingly, we look for a 0.3% increase in core capital goods shipments.
  • 10:00 AM Fed Chairman Powell (FOMC voter) speaks: Federal Reserve Chairman Jerome Powell will deliver a speech titled “Monetary Policy in a Changing Economy” at the Kansas City Federal Reserve Bank’s annual Economic Symposium in Jackson Hole. The topic of the conference this year is “Changing Market Structure and Implications for Monetary Policy.” Audience and media Q&A is not expected.

Source: DB, Goldman, BofA