Yellen’s Much Anticipated Speech at Jackson Hole May Cause Some Waves
Poor Swedish Data Sends The SEK Lower
Series of data from Swedish economy turned out to be a huge disappointment. The unemployment rate rose from 6.6% to 7%, much more than the consensus was expecting (6.7%).However, data on employment is quite volatile. Recently we have seen a big downward move in the rate of unemployment, so it’s hard to give it a big importance. The rate without the seasonal adjustment fell from 7.6% to 6.3% (consensus was at 5.9%).
The biggest concern can be found in the consumer confidence. The CC index fell to 95.2 from 93.9, while the market was expecting a tick up in the sentiment. What’s more, it was accompanied by a deterioration in manufacturing confidence. In addition, also economic tendency survey showed a sharp deterioration of business climate in Sweden (100 vs. 102.3 previously).The data is a huge disappointment. The consumer confidence index is at its lowest since 2013.
Survey ahead of the Jackson Hole
- Citibank conducted an interesting poll ahead of the beginning of the long-awaited Jackson Hole symposium. The survey was run among hedge funds, Citi colleagues, corporates and some central bankers. Here are the results:
- The overwhelming expectation is of a dovish hike signal
- 85% see Yellen leaning to 1 hike in 2016
- Around 66% Yellen to indicate Dec as the main date
- Respondents see the market expecting just over 50% probability that a hike is mentioned in her speech
- If Yellen signals a 2016 hike with a dovish message for the future nearly 50% expect Emerging markets as the main gainers. Investors are expected to:1. Buy EM2. Buy S&P3. Buy US 10yr Treasuries4. Sell US 2’s5. Buy EM debt or other parts of US yield curve
- What’s more, two thirds think Yellen won’t change inflation language of 2% target but 29% think The Fed will change their targets in the next 2 years.
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