The Day at a Glance | August 23 2024

The Top

• With expectations of a Federal Reserve rate cut set for the upcoming September meeting, Powell may focus on explaining US economic conditions at the Jackson Hole Symposium.

• During his appearance at Jackson Hole, an increasing number of European Central Bank officials are lining up behind another interest rate cut in September, and only major surprises in the data published in the coming weeks could delay the move.

• Vice President Kamala Harris sealed the Democratic presidential nomination with a powerful speech, laying out broad foreign policy principles and stark contrasts with her Republican rival Donald Trump, with 11 weeks remaining in the race for the White House.

• Bank of Japan Governor Kazuo Ueda reaffirmed his determination to raise interest rates if inflation remains on track to sustainably reach the 2% target, suggesting that recent market volatility will not derail his long-term rate hike plan.

• Oil prices rose 2% on Friday due to a weaker dollar, but they are still on track to end the week lower.

Economic Environment

With expectations of a Federal Reserve rate cut set for the upcoming September meeting, Powell may focus on explaining US economic conditions at the Jackson HoleSymposium. Federal Reserve Chairman Jerome Powell will take the podium at 8 a.m. at the Jackson Hole monetary policy symposium. US economic data is giving the Fed the green light to begin cutting interest rates, with financial markets aligned for the first move. On Wednesday – and with July´s meeting minutes – the central bank virtually confirmed that a “vast majority” of officials agreed that monetary policy easing would likely begin in September. In this context, Powell’s goal may be more about assessing the US economic situation than setting expectations for the upcoming cut. Investors are hoping that the Fed Chairman will provide a clearer idea of whether he believes inflation has cooled enough to justify a rate cut next month and whether his concerns about a rising unemployment rate could result in that first decrease in borrowing costs being larger than expected. However, it will be difficult for Powell to commit to a specific path at the Jackson Hole Symposium,as there is still a lot of economic data to be released before the September 18^th meeting, and the Federal Reserve has repeatedly committed to being data-dependent.

Markets and Companies

The market’s attention is focused on the Jackson Hole symposium, set to begin shortly at 10:00 AM ET (8:00 AM local time), where Jerome Powell is expected to deliver a speech outlining his monetary policy outlook. Expectations suggest a higher probability of a 25-basis point cut (71.5%) in the September Fed meeting, according to FedWatch. Meanwhile, the US market is logging slight gains. In Europe, main indices are performing positively.

Bank of Japan Governor Kazuo Ueda reaffirmed his commitment to raising interest rates if inflation continues to approach the 2% target, though he cautioned about ongoing instability in financial markets. The market’s overall reaction has been positive.

Oil is experiencing a slight rebound after reaching its lowest level since early January earlier this week, following a significant downward revision by the US government of the number of jobs added by employers in the country through March. This, coupled with weak demand in Asia, has influenced price trends. Other commodities are seeing a slight increase.

US 10-year bonds are at a yield of 3.84%, while the 2-year yield stands at 4.01%.

In Mexico, the IPC stands at 53,397.1 points.

The exchange rate is at 19.26, after closing at 19.52 yesterday.

Corporate News

• Workday shares are up nearly 12.7% at the open after beating analysts’ second-quarter expectations ($1.75 vs. $1.65 EPS).

• After a significant rise in Peloton’s stock price, the exercise equipment and media company saw a drop due to mixed expectations for the rest of the year.

• Laurent Freixe has been named the new CEO of Nestlé, replacing Mark Schneider, who is leaving the company.