Traders and investors will closely watch Friday morning’s U.S. personal income and expenditures data, including the inflation readings. The Federal Reserve is said to watch the personal income inflation data closely. The July PCE price index is seen coming in at up 2.6% year-over-year, with the “core” PCE reading (excluding food and energy) seen coming in at up 2.9%. In the June report, the PCE was up 2.6% and the core PCE was up 2.8% annually. Then, many traders and investors will hit the exit doors for an early jump on a three-day U.S. holiday weekend.
Watch the Hong Kong Money Markets in the Coming Weeks
The upcoming U.S. Labor Day holiday weekend marks the unofficial end to summer. Family vacations are over, kids are back in school, days are getting shorter — and traders and investors are getting down to more serious business after their summertime adventures. That means the potential for more marketplace fireworks in the coming weeks.
Veteran market watchers also know that history shows September and October can be extra turbulent trading months for the stock and financial markets.
As that timeframe approaches there may be an early warning coming from Hong Kong. Financial liquidity conditions in Hong Kong resumed tightening this week, with a key money-market rate climbing above a level that some analysts say may dent an economic recovery for Hong Kong. The benchmark one-month Hong Kong Interbank Offered Rate — or HIBOR — jumped above the closely watched threshold of 3% Wednesday, reaching the highest since May.
If the gauge remains above that level, it could have a negative impact on the Hong Kong economy as investors would become more cautious, and borrowing demand would fall, Morgan Stanley analysts wrote in a note last week, as reported by Bloomberg.
History also shows that dislocations in smaller Asian markets can be a precursor and tip off traders that trouble may be lurking in the major Western markets. Any early hints of market dislocations would quickly drive safe-haven demand to the gold (GCZ25) and silver (SIZ25) markets, including a more serious event possibly pushing gold and silver prices to record highs.
Other Early Fall Market Events to Watch
The meeting of the Federal Reserve’s Open Market Committee (FOMC) on Sept. 16-17 is highly anticipated because the Fed is expected to lower U.S. interest rates by 0.25%, with an outside chance the central bank might do a 0.5% rate cut. Fed Chair Jerome Powell at his speech in Jackson Hole, Wyoming last week leaned easier on U.S. monetary policy and suggested a rate cut at the September FOMC meeting.
The progress, or lack thereof on U.S. trade deals, will also likely influence the marketplace this fall, especially the ongoing trade discussions between the U.S. and China, which are the two largest economies in the world.
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On the date of publication, Jim Wyckoff did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
