It’s a new week in the financial markets, and one that already has investors very excited. The Jackson Hole Symposium will take place this week, so all eyes will be on the Federal Reserve, which is likely going to announce its timeline for asset purchase tapering.
Inflation has risen above the forecasts and there have been some improvements in the US labor market, so many experts expect that the Fed is likely going to start reducing its bond buying this year.
However, the spike in coronavirus cases in the United States and around the world in recent weeks have cast some doubts over the tapering, because the US may experience another slowdown if the pandemic continues.
Meanwhile, US Treasury Secretary Janet Yellen, who used to be head of the Federal Reserve herself, has reportedly backed Jerome Powell for a second mandate as Chair of the central bank. The news was well-received by investors, who prefer stability when it comes to the Federal Reserve.
Furthermore, the chaos in Afghanistan continues. Western powers are still in the process of evacuating their own citizens and Afghan allies who worked with them over the past two decades, though the situation got very tense very quickly, leading to massive crowds at Kabul’s airport last week. US President Joe Biden commissioned 18 extra planes to help evacuate refugees out of Afghanistan, but that won’t be sufficient.
As for the stock market, today we are going to see a rise in US stock indices thanks to a slight improvement in the global economic outlook. The coronavirus pandemic seems to be slowing down in China, at least according to the official data, so investors are optimistic about the second largest economy in the world stabilizing again, which is boosting sentiment.
As for Europe, today a large set of flash PMIs for August indicated that the economy is still growing, though most reports from the EU missed the target levels. The United Kingdom also did not manage to meet investors’ expectations. The manufacturing PMI out of the United States was disappointing as well.
