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.
Looking into next week, I think we have a raft of data to wade through. So can you tell us what you're going to have your eye on in the week ahead?
Absolutely. Yeah. It's been another complex week for financial markets as the supply, and demand dynamics of summer market participation, added to the complexity of the current macroeconomic configuration amid fractious US sentiment, as a function of burgeoning US fiscal deficits and heavy bond issuance. The US CPI Print had minimal direct impact. However, we continue to view significant further disinflation, through the remainder of 2023 as the most likely trajectory with clear implications for policy and for markets. Next week, we'll also be light on data and on participation, but there are a few things we have our eye on.
Firstly, in the US, following on from the further moderation and consumer prices this week, next week brings the policy reaction function into focus. With the minutes of the July FOMC, the September Fed meeting, and in particular, the new summary of economic projections or DOTs will be the primary event for global markets over coming weeks. That is barring a surprise from Jackson Hole as the Fed adjusts their economic and rate forecasts to the most recent data, where we have seen further signs of price and activity moderation so far. But the minutes of the July policy meeting, which may well prove to have been the last hike of the cycle, will be keenly watched for broader spread of opinions on the inflation and growth trade off in the US.
Secondly there's some global data next week worth keeping an eye on. Japanese CPI, for signs of further policy relevant inflation persistence. German ZEW for signs of stabilization in German industrial activity, and the July suite of data from China. Recent activity from China has been acutely disappointing, shall we say. So much so that we'll also be keeping half an eye out for some unannounced Chinese fiscal stimulus.
Then lastly, next week is a very important week for the UK, after the August Bank of England meeting where a 25-basis point hike was accompanied by a less hawkish narrative one that focused on the restrictiveness of policy and the potential for further tightening. Due to the lagged impact of past cumulative hikes and also one that emphasized the evidence driven or data dependent nature of future policy decisions. Next week's data takes on a more significant role. With employment on Tuesday, inflation on Wednesday, and retail sales on Friday. We'll have a better insight into the likely policy leanings of the MPC at the September meeting. Our view is that inflation risks are likely to the downside for the July reading, and the activity is showing some more consistent signs of weakness. Data this week will be very important to that view to the Bank of England and for wider markets, another interesting week.
Absolutely another interesting week ahead and thank you for sharing your thoughts. In the meantime, we have the weekend. There are a few things I think I have my eye on, but what about you?
Absolutely. Another huge weekend for sport. Cricket with a hundred and some international T20 action. We have golf the culmination of the Women's European tour event just outside London at Walton Heath. The Women's World Cup quarterfinal, Spain Sweden now currently booked their place for the semi-finals awaiting Australia versus France and England versus Columbia to battle out for the final two spots. It is also the start of the premiership season that European champions West Ham, away to Bournemouth and also European champions, Man City away to Burnley. But the big game, probably Chelsea versus Liverpool on Sunday afternoon. But for me, it's all about the rugby. The return matches with both England and France looking to overturn last week's results versus Wales and Scotland. Respectively, a huge game from Twickenham on Saturday Eve.
A huge game indeed. Thank you for sharing your thoughts on the week ahead. I look forward to catching up with you again next week.
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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