21 August 2023
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Jackson Hole in focus this week

By Edward Bell

Central bank commentary will be in focus this week as the Federal Reserve hosts its annual symposium at Jackson Hole. Fed chair Jerome Powell is due to speak on Friday with market observers likely to pore over his commentary for any indication on what will trigger a move from the Fed, either to keep pushing rates higher or when they will shift to a more accommodative stance. At the same time, South Africa will play host to the BRICS summit where the leaders of all member nations apart from Russia will meet and potentially discuss greater economic cooperation.

Beyond the central bank chatter, the other main focus for the week will remain on China where the seeming slow motion unravelling of debt at major property developers will hang over the economic outlook. The People’s Bank of China surprised markets by cutting rates last week while the government nudged private banks over the weekend to do more to support growth.

Retail sales in the UK fell in July, down 1.2% month/month after a modest gain of 0.6% in June. Poor weather conditions seemingly kept retail activity subdued in July. Data out earlier in August showed that inflation slowed in July, down 0.4% m/m. Given the apparent strong link to weather conditions for July, the retail sales print may have been an outlier in its weakness though slowing but still hot inflation will mean the Bank of England still needs to keep a tightening bias to policy at its next meeting.

Today’s Economic Data and Events

  • 10:00 GE PPI y/y July: forecast -5.1%

Fixed Income

  • US Treasuries ended the week with neither the front or longer end of the curve showing much direction. Yields on the 2yr UST added about 1bps after about 5bps of round trip movement, closing at 4.9245%, while the 10yr yield pulled lower, down about 2bps to 4.2546%.
  • European bonds ended the week on a stronger footing with gilt yields down about 7bps to 4.668% while bunds rallied even more with yields off by 9bps to 2.616%.
  • It will be an active week for central banks alongside the Fed hosting the Jackson Hole symposium. Sri Lanka, Indonesia, Turkey and South Korea all set policy on August 24 with Turkey expected to hike rates substantially.


  • Currency markets pulled away from the dollar at the end of the week with the DXY index recording its first daily loss in the last seven trading sessions. USDJPY provided most of the move against the dollar with the pair down 0.3% for a second day running, ending the week at 145.39. EURUSD ended near unchanged at 1.0873 while GBPUSD slipped 0.1% to 1.2734.
  • Commodity currencies ended the week quietly with no substantial moves to offset losses earlier in the week.


  • Global equity indices sold off last week as risk-on sentiment wilted in the face of prospective higher for longer rates. The interest rate sensitive big tech stocks were especially weak and in the US the NASDAQ dropped 2.6% w/w. The S&P 500 ended Friday down 2.1% w/w while the Dow Jones dropped 2.2%.
  • Losses in East Asia were even more pronounced as government support measures in China have continued to underwhelm. The Hang Seng dropped 5.9% w/w with the mainland Shanghai Composite falling by a lesser 1.8%.
  • Locally, the DFM closed down 0.3% w/w while the ADX dropped 0.8%.


  • Oil prices recorded their first weekly loss since the end of June last week with both Brent and WTI futures down 2.3% to USD 84.80/b and USD 81.25/b respectively. The negativity around China’s economic outlook will weigh on the near-term sentiment toward oil which may trade heavy as a result.


Written By

Edward Bell Head of Market Economics

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