After a strong correction in August on Wall Street and other exchanges, there is now no trace. The Japanese Nikkei225, which experienced a particularly drastic markdown, has also managed to catch up. The DAX is setting new historical highs. The industrial Dow Jones is on a “record attack”. The technological Nasdaq 100 has returned to growth, but in this case, slight disappointment with the performance of Nvidia is one of the reasons why this benchmark lacks a little more to reach its All-Time High (ATH). The report of the major AI representative was better than forecast but at the same time, it was not as phenomenal as the results shown in previous quarters. Inflation in the US is stabilizing. Meanwhile, Friday’s report showed that consumer strength is still significant. The GDP revision for the US suggests that the economy did quite well in the second quarter and grew by 3 percent, exceeding expectations.
Recent data from the US have pushed back the vision of a deeper cut in interest rates (by 50 basis points). The market still fully prices in a half smaller move. Are we again entering the period of a “Goldilocks economy”, where growth is moderate and inflation is low? However, the condition of the American labor market remains a big question mark. At this point, next week’s NFP report seems to be particularly important for the market and may provide a final answer as to what the Fed will do in two and a half weeks.
In addition to the NFP report, we will get the publication of ISM indices, the ADP report, and the JOLTS survey in the following days. All of this will relate to the United States. For Europe, the key publication appears to be the PMI indicators. Retail sales numbers and GDP for the eurozone will also be important. Let’s also remember that the National Bank will decide on interest rates. However, we do not expect any changes in the parameters of monetary policy.
Łukasz Zembik Oanda TMS Brokers
Source: https://managerplus.pl/niska-inflacja-i-umiarkowany-wzrost-czy-wchodzimy-ponownie-w-faze-goldilocks-economy-10042
