Anshuman Daga’s outlook for the day ahead in European and worldwide markets
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In the week preceding the European Central Bank’s (ECB) meeting, investors place a premium on inflation statistics.
But will this actually alter the market’s view that significant rate rises are imminent? Unlikely
Today, a flurry of inflation data from Germany and Spain could set the tone for the area before Wednesday’s data from the euro zone.
Though Fed Chair Jerome Powell cautioned against anticipating a rapid reversal of its rate tightening that would send markets into a tailspin, Rabobank notes that one of the most significant shifts at Jackson Hole was the European approach.
The money markets of the Eurozone are now pricing in a two-thirds possibility of a 75-basis-point rate rise, which sent the yield on Germany’s two-year bond to a two-month high on Monday before it settled down.
Related: Stock Market Crash Caused by Powell’s Jackson Hole Speech
The euro was reassured by expectations of a substantial rate rise, while the dollar languished on Tuesday after sliding from a two-decade peak against key rivals. Asia’s stock markets rebounded from early dips. At the same time, ECB chief economist Philip Lane adopted a relatively dovish stance, stating that the ECB should hike interest rates at a “steady pace” until the conclusion of its rising cycle.
He explained that this was done in part so that policy might be altered if circumstances changed.
The comments came soon after Isabel Schnabel, another member of the ECB’s board of directors, said on Saturday that central banks must tighten policy even during a recession to fight inflation.
In addition, the energy crisis is putting pressure on governments and regulators. On September 9, the energy ministers of the European Union will hold emergency meetings to try to find a solution to the rising costs of gas and electricity.
In the meantime, Dutch railroad employees will go on strike throughout the country on Tuesday, halting train service owing to an intensifying wage dispute.
European Countries in terms of Energy Storage
Tuesday’s significant market-moving events include:
Economic data include the German and Spanish Consumer Price Indices, as well as the Austrian Producer Price Indices and the Swedish Consumer Confidence Index.
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Speakers: The Norwegian Minister of Finance, Trygve Slagsvold Vedum, delivers a speech on the condition of the economy. The Governor of the Riksbank also takes the floor.Stefan Ingves takes part in an inflation panel discussion.
According to the market, inflation is the sole game in town.
