{"id":25501,"date":"2021-09-02T09:51:42","date_gmt":"2021-09-02T08:51:42","guid":{"rendered":"https:\/\/sarasinandpartners.com\/ie\/?p=25501"},"modified":"2021-09-07T13:29:24","modified_gmt":"2021-09-07T12:29:24","slug":"the-week-in-markets-2-september-2021","status":"publish","type":"post","link":"https:\/\/sarasinandpartners.com\/ie\/think\/the-week-in-markets-2-september-2021\/","title":{"rendered":"The week in markets – 2 September 2021"},"content":{"rendered":"

Welcome to your weekly macroeconomic round-up, where we spotlight a few of the most significant events in the last week.<\/h3>\n

Jerome Powell's speech at Jackson Hole signals tapering before the end of the year but rate hikes will take time<\/strong><\/h3>\n

Central bankers, policy makers and academics gathered in Jackson Hole last week for the annual economic symposium. As usual, investors\u2019 main focus was on US Federal Reserve Chairman Jerome Powell\u2019s speech for information on the future path of monetary policy in the US. Powell reiterated that there has been \u2018substantial progress\u2019 towards the central bank\u2019s inflation objectives but highlighted that further progress towards the employment objective was needed before the Fed would start the process of \u2018tapering\u2019.<\/p>\n

The market\u2019s focus was on the rhetoric surrounding interest rate hikes, on which Powell communicated that investors shouldn\u2019t assume that the timing and pace of tapering indicates when interest rates might be raised. Interest rate hikes require \u2018maximum\u2019 employment and an indication that inflation will at least meet the 2% target for some time. This essentially separates the two policy tightening tools that have been previously seen as sequential in nature and means that the pause before the first Fed rate hike might be longer than previously thought.<\/p>\n

US PMI data indicate a sharp slowdown in private sector expansion<\/strong><\/h3>\n

Data from the August survey of purchasing managers indicated that businesses became significantly less optimistic than they had been in July as the spread of the Delta variant and capacity constraints weighed on sentiment. The headline composite index fell from 59.9 to 55.4, an 8-month low, while services fell from 59.9 to 55.2 and manufacturing fell from 63.4 to 61.2. While a reading above 50 indicates an expansion in activity, the contraction in the pace of expansion is dramatic and is raising concerns over the longevity of the current economic cycle.<\/p>\n

Survey results also indicate that input price inflation accelerated to the second fastest on record, with both manufacturers and services reporting increasing costs. Moreover, material shortages, difficulties hiring new staff and the spread of the Delta variant were all highlighted as contributing to capacity constraints that which led to a backlog of work during August.<\/p>\n

Eurozone PMI present healthy expansion in activity coupled with a booming stock market<\/strong><\/h3>\n

The August PMI for the eurozone moderated slightly from July but remained near 15-year highs, falling from 60.2 to 59.5. Both the constituent indices of manufacturing and services fell over the month, from 62.8 to 61.5 and 59.8 to 59.7 respectively.<\/p>\n

Although the Delta variant is causing some concern amongst businesses, much as it has in the US, Europe has actually been experiencing a healthy rebound in hiring as firms boosted capacity to meet rising demand. However, there was more evidence that that firms\u2019 costs and prices charged rose once again at some of the fastest rates seen in the last 20 years as demand outstripped supply.<\/p>\n

Markets <\/strong><\/h3>\n

The main event of the week was Jerome Powell\u2019s speech at Jackson Hole , which was positively received by the market. The fact that rate hikes might be some way off led US Treasury yields back below 1.3%, while US equity markets made new record highs (measured by the S&P 500 index). The lower yields on US Treasuries also extended the recent outperformance of growth stocks compared to value stocks in the US.<\/p>\n

Look out for next week\u2019s update, where we\u2019ll be focusing on Chinese PMIs and US non-farm payrolls.<\/p>\n

\n

All details in this article are provided for information purposes only and should not be misinterpreted as investment advice or taxation advice.<\/p>\n

Where the data in this article comes partially from third party sources the accuracy, completeness or correctness of the information contained in this publication is not guaranteed, and third-party data is provided without any warranties of any kind.\u00a0 Sarasin & Partners LLP shall have no liability in connection with third party data.<\/p>\n

\u00a9 2021 Sarasin & Partners LLP \u2013 all rights reserved.\u00a0 This article can only be distributed or reproduced with permission from Sarasin & Partners LLP. Please contact marketing@sarasin.co.uk.<\/p>\n","protected":false},"excerpt":{"rendered":"

Welcome to your weekly macroeconomic round-up, where we spotlight a few of the most significant events in the last week. Jerome Powell's speech at Jackson Hole signals tapering before the end of the year but rate hikes will take time Central bankers, policy makers and academics gathered in Jackson Hole last week for the annual...<\/p>\n","protected":false},"author":62,"featured_media":11884,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[28],"tags":[],"coauthors":[182],"class_list":["post-25501","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets"],"yoast_head":"\nThe week in markets - 2 September 2021 - Sarasin & Partners Ireland<\/title>\n<meta name=\"description\" content=\"Jerome Powell's speech at Jackson Hole signals tapering before the end of the year but rate hikes will take time.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/sarasinandpartners.com\/ie\/think\/the-week-in-markets-2-september-2021\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The week in markets - 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