FUNDAMENTAL REVIEW FOR THE WEEK 19 - 23 August 2024

There are not many important reports and economic events expected in the coming week. The foreign policy arena is also experiencing a period of relative calm. Negotiations on the Iran-Israel line are ongoing, the acute phase of the conflict has temporarily passed, although it has not yet been possible to agree on a truce. The situation may move forward after the meeting between US Secretary of State Blinken and Netanyahu this week. However, in fact, money has flowed back from the safe-haven dollar to risky assets.

Fed member Mary Daly, who is considered Powell's unofficial voice, has directly stated the need to lower the interest rate, since with the current decline in inflation, such high rates are no longer justified.

As for economic reports, the first significant event will be the publication of the Fed minutes on Wednesday. However, given the changes in the wording of the accompanying statement and Powell's press conference, we can expect softer rhetoric "on paper". It is also worth noting that the Fed minutes are already out of date after the publication of disappointing US employment data for July.

Thursday will be the first real day of economic data releases: the Eurozone and UK PMIs can directly affect the euro and pound rates, and the US PMI can also cause a short-term reaction in the markets for most majors (although the ISM report is preferred). The weekly US unemployment data, which will be released on the same day, should not be discounted either.

The main event of the week will be the Fed symposium in Jackson Hole. Powell's opening statement will be published on Friday at 17:00 Moscow time. He is expected to announce a move to cut rates, but is unlikely to specify the timing and size of the reduction, since Fed members want to wait for the employment data on September 6 to determine the size of the rate cut at the meeting on September 18. These data will also affect the Fed's September forecasts for the rate trajectory.

The only major auction this week is on Wednesday, an issue of 20-year U.S. Treasury notes. The issue is small and demand is expected to be strong, as former Treasury Secretary Steven Mnuchin has said he wants to stop issuing 20-year notes because of their high yields compared with 30-year notes.