In-depth Analysis

Weekly Outlook 22-26 August

Focus on GDP, PCE, and Jackson Hole 

  • On Monday 22nd: Canada will release its July MoM New Housing Index.
  • On Tuesday 23rd: The U.S, German, French, and Eurozone Manufacturing and Service PMI’ reports are released, along with the U.S New Home Sales report.
  • On Wednesday 24th: The Core Durable Goods Orders and Pending Home Sales reports are due from the U.S.
  • On Thursday 25th: The German and U.S GDP data and German Ifo Business Climate Index comes out.
  • On Friday 26th: The Tokyo Core CPI and the U.S Core PCE Price Index will be released.

Last week in review

Following five weeks of growth for major indexes, mostly in response to positive corporate releases, most financial markets took a breath and recorded a weekly fall last week. Poor macroeconomic data, as well as the FOMC’s minutes and comments from the Fed, have weighed on investor mood and risk appetite. The Fed seems to be committed to continuing to apply aggressive monetary policies in the near term, triggering fears of an upcoming recession.

Weekly outlook

France, Germany, the United Kingdom, and the United States will all publish their Flash Service Manufacturing and Service PMI on Tuesday, reflecting the evolution of the health of the manufacturing and the service sector. Globally, all figures are expected to have worsened compared to the previous period. Remember that a reading above 50 indicates an industry expansion, while a reading below 50 indicates an industry contraction. 

German and American GDP figures for the second quarter of 2022 will be closely monitored at the end of the week, as well as US inflation figures with the PCE.

Investors will also monitor the Jackson Hole Economic Symposium that will take place during August 25-27, where the topic of discussion will be “Reassessing Constraints on the Economy and Policy”.

Monday 22nd of August

From Canada, the New Housing Price Index becomes available today, and will show whether the selling price of new homes is increasing or declining. Forecasts predict an increase from 0.2% to 0.3%.

Most important company announcement of the day:

  • Palo Alto Networks

Tuesday 23rd of August

The U.S, Germany, France, and the Eurozone will release their Manufacturing PMI reports for the month of August. 

These figures signal whether the manufacturing sector of the economy might be expanding or contracting. A level above 50 indicates expansion, below 50 would indicate contraction. The U.S is expected to have adjusted from 52.2 to 51.9. Germany expects to decrease from 49.3 to 48.3, France expects to fall from 49.5 to 48.9, and the Eurozone is reportedly decreasing from 49.8 to 49.

You will also be able to follow their Service PMI figures that are globally expected to keep falling.

The U.S New Home Sales for the month of July is expected to show that the annualized number of new homes for single families sold was down from 590K to 575K.

Most important company announcement of the day:

  • Macy’s

Wednesday 24th of August

From the U.S, the monthly Core Durable Goods Orders, which indicates the monthly level of manufacturing activity for durable goods for July, as it relates to new orders for long-lasting manufactured goods, is expected to be down from 0.4% to 0.2% in July.

The National Association of Realtors (NAR) Pending Home Sales Report is also due from the U.S, which measures the MoM number of homes sold but still under contract for July. From May to June this number dropped from 0.4% to -8.6%. The reading is expected to improve to -3.8%.

Most important company announcements of the day:

  • Nvidia
  • Salesforce

Thursday 25th of August

Today, Germany and the U.S will release their GDP figures for the second quarter. The U.S QoQ results are expected to go from -0,9% to -0,8%.

Additionally from Germany, the Ifo Business Climate Index – which surveys the country’s manufacturers, wholesalers, builders, and retailers to measure their perception of current and future national conditions – will be published. The higher the number the more positive the outlook. This report’s forecast is set to increase from 88.6 to 90.2.

Most important company announcements of the day:

  • Dollar Tree
  • Dell Technologies

Friday 26th of August

From Japan, the Tokyo Core CPI YoY for the month of August is expected to increase from 2.3% to 2.5%.

The U.S will release its Core Personal Consumption Expenditure Price Index, which is a look at the difference between what consumers have spent on their goods and services from one month to the next, excluding food and energy needs. This is a key piece of information for inflationary information, and is expected to decrease from 0.6% to 0.3% MoM for July.

Most important company announcements of the day:

  • Baidu
  • Hewlett Packard

 

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