The marathon of central bank decisions is over. Strong signals of continued monetary tightening in developed countries put pressure on risk assets this week, and investors will be looking forward to positive economic developments. Investors will also be watching the JPY closely after this week's BoJ intervention. Pay particular attention to GOLD, US500 and USDJPY in the coming week.
The FOMC once again raised inflation forecasts in its latest set of projections. PCE inflation is now expected to average 5.4% this year, up from 5.2% in the June forecast. PCE data for August will be released next week on Friday at 1:30 p.m. BST. The market expects a slowdown from 6.3 to 6.0% y/y. However, the core rate is expected to accelerate again, this time from 4.6 to 4.8% y/y. Investors in the gold market will be watching the data closely after the precious metal's price fell to a two-and-a-half-year low.
A strong rise in yields put pressure on global equities last week, pushing U.S. indices toward June lows. Yields and the economic outlook are likely to remain key factors for stocks in the coming weeks and perhaps even months. Data on U.S. durable goods orders and the Conference Board consumer confidence index will be released next Tuesday. Consumer confidence remains stable, but orders are declining. There will also be speeches by Fed officials in the coming week, including Powell on Wednesday.
The Japanese yen will be closely watched in the coming days, and this is due to this week's BoJ intervention. Currency interventions by the BoJ in the past have rarely been a one-time event, and subsequent actions have also followed one another. However, it should be noted that these successive interventions have had a diminishing effect on the currency pair. In any case, volatility in the Japanese yen market is expected to remain elevated.