The risk appetite improves a bit on early Monday as traders prepare for this week’s annual central bankers’ speeches at the Jackson Hole. Also likely
could be the headlines suggesting more stimulus from China, as well as the People’s Bank of China’s rate cut. However, mixed concerns about the Federal Reserve Chairman Jerome Powell’s monetary policy bias on Friday seem to prod the momentum amid a light calendar.
While portraying the mood, the S&P500 Futures print mild gains around 4,390 to extend the previous day’s rebound from the lowest level since mid-June. On the same line, the US 10-year Treasury bond yields also reverse Friday’s retreat by rising back to 4.28% at the latest. It’s worth noting that Wall Street closed mixed on Friday whereas the US Treasury bond yields retreat after poking the yearly high.
Talking about China, the People’s Bank of China , lowered the one-year Loan Prime Rate to 3.45% from 3.55% previous and 3.40% expected. However, the Chinese central bank kept the five-year LPRs unchanged at 4.20%. In the last week, the PBoC cut the Medium-term Lending Facility , Standing Lending Facility Also, Chinese state media Xinhua came out with the news suggesting the authorities plan to introduce subsidies for fertilizers and pesticides in the northern region of the nation, per Reuters.
On the other hand, Goldman Sachs expects Fed Chair Powell to sound defensive during the annual event of the central bankers but the Bank of America expects Fed’s Powell to push back against the rate cut expectations. The reason for these banks’ indecision could be linked to the recently mixed US data and the previous bias about the policy pivot.and wage growth allowed the US Dollar to remain firmer for the fifth consecutive week, especially backed by the hawkish Fed Minutes.
Moving on, the preliminary readings of August month’s Purchasing Managers Indexes and the central bankers’ speeches at the annual Jackson Hole Symposium event will be crucial to watch amid indecision about the “higher for longer” rates.
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