Welcome to "The Long & Short of the Week Ahead", a production of Eurizon SLJ Capital that takes a look at the macro-economic themes of the week ahead and has been recorded for professional investors.
My name is Matt, Head of Distribution for Eurizon SLJ Capital, and I'm joined by Neil Staines, Senior Portfolio Manager.
Welcome back, Neil. It's great to have you here with us again.
Thank you very much Matt. It's great to be here.
So, we are back from a short summer break. Although I think it's fair to say that markets geopolitics and monetary policy have not really taken much of a break. So perhaps you can just take us through what you're seeing over the course of the next week.
Absolutely. Yeah. Thanks Matt. It's been another complex week for financial markets with the US labour markets focus front and centre. But as global growth continues to move closer to front of mind the policy evolutions in China and the Eurozone China, adding further economic support measures and Europe are more subtle, but clearly more concern about the evolution of growth from a monetary policy perspective are also contributing to the macroeconomic complexities and against the current backdrop. Now payroll's their big focus into the close of this week and the start of September where a pickup in the labour force drove the unemployment rate higher. As the labour market tightness continues to ease, there are, however, a few things that we are looking out for next week.
Firstly, markets will be very attentive to the data and rhetoric out of Asia next week as well as the prospect of further policy support measures or tweaks. Now, China Services PMI for August on Tuesday will be closely watched as will Australian trade data. However, with the new stimulus measures, something that we mentioned on our last podcast yet to feed through into the data. Equity risk equity and risk sentiment will be closely watched for indications of the perceived effectiveness and sustainability of policy support.
Secondly in Europe will also be a big focus next week. Not only linked to the Chinese demand cycle, but also in terms of domestic investor sentiment for which we get data on Monday consumer inflation expectations, where we also get data on Tuesday and any incremental changes to the monetary policy trajectory therein. Now, last week saw a concerted if moderate dovish emphasis changes from ECB speakers notably Schnabel and Lane. With respect to the balance of risks between growth and inflation, German factory orders and industrial production for July, alongside the Eurozone Q2 GDP revision will be closely watched to update expectations of current growth momentum in the region.
Finally, and for us, most importantly, next week will be dominated by US macro, following on from the important payroll report that closed last week. Now a slow start to next week with the US Labour Day holiday, traditional marker for the end of the summer period on Monday. But with the important service sector ISM on Wednesday. And a plethora of Fed speakers on Wednesday and Thursday, we'll get an important emphasis on the economic and policy evolution in the US. As we discuss further in this week's blog, we expect those who have recently emphasized the risk of a re-acceleration of growth and thus inflation to be disappointed as growth continues to moderate supported, at least in part by continued sharp declines in inflation leaving something more like a soft landing for the economy and a hard landing for inflation from our viewpoint, an important week for the US and for the global macro next week.
Thank you, Neil. A big week indeed. In the meantime, we have the weekend. What have you got your eye on?
Absolutely, Matt. Yeah, plenty to focus on this weekend. US open tennis for those that are tennis inclined. Formula One moves to Italy and Monza. However, Verstappen and Red Bull now looking unstoppable for the title. There's no rugby ahead of the very exciting world Cup from France starting on the 8th of September. Indeed, starting with a bang as the hosts face New Zealand in the opening game. But for me this weekend will all be about the football, a full premiership schedule with what is increasingly looking like a two-horse race for the premiership title between last year's European Champions, Manchester City this weekend at home to Fulham and Westham, away to Luton, Arsenal and Manchester United, probably Sunday afternoons pick of the bunch and plenty of action up and down the country this weekend.
Fantastic. Thank you, Neil, for joining us once again and outlining your thoughts on the week ahead. I look forward to catching up with you again next time.
Thank you for joining us for "The Long and Short of the Week Ahead". Further insights are available on our website eurizonsljcapital.com/insights. We look forward to you joining us again next week for more insights into macro-economic events and "The Long and Short of the Week Ahead".
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