Yellen’s Much Anticipated Speech at Jackson Hole May Cause Some Waves

Yellen's Much Anticipated Speech at Jackson Hole May Cause Some Waves

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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