Honey we’ve been talking about Jackson

Four weeks of stock market losses were reversed last week, and the S&P 500 had its best week for a couple of years after a selection of economic data restored investors’ faith in the “soft landing” scenario. The S&P 500 back is close to its previous all-time high. Further data encouraging the view inflation is slowly but surely heading to the Fed’s 2% target helped underpin the expectation the Fed will make its first move to cut interest rates in September. Towards the end of this week, Jerome Powell and a selection of central bankers, academics and journalists meet to discuss the finer points of monetary policy at the annual Jackson Hole symposium. Powell’s turn is on Friday to address the assembled, which he is expected to confirm, as much as he can do, that the Fed will cut rates at the September meeting. What may be of more interest is how he describes the path from there; I would assume him to be fairly non-committal. He could also indicate whether 50 basis points are on the cards. My bet is that he will indicate just the 25 basis points. Heading into the US election, Mr Powell will not want to be accused by either side of influencing the economy. We also get the minutes of the last Fed meeting this week.

The price of gold continues to power on; I cannot figure that one out. An increase in appetite for risk assets should, in theory, have resulted in a move away from the likes of gold. There seem to be some indications of an effort to broker a ceasefire in the Middle East, which, again, could possibly ease the demand for gold. The price of oil fell.

After the raft of economic data indicating the UK economy is having its own Goldilocks time, apparently growing at annualised rate of over 2%, inflation is close to banks’ target as we hope for further rate cuts in the coming months. So far, the gilt market has not unduly reacted to a selection of above-inflation wage rises, one of which encouraged one particular union to go back for more. This week is a fairly quiet week for UK data. Now, it’s the turn of the euro area to release its latest inflation data. We also get Japan’s latest inflation report and whether that will add to further speculation about the Bank of Japan raising rates again.

Finally, we will get the monthly flash purchasing manager surveys towards the end of the week. Equity markets in Europe are starting the week on a quiet note.