Weekly Market Outlook (21-25 August 2023) 


  • Monday: PBoC LPR. 
  • Wednesday: NZ Retail Sales, AU/JP/EZ/GB/US PMIs, Canada Retail Sales. 
  • Thursday: US Jobless Claims. 
  • Friday: Fed Chair Powell speaks at the Jackson Hole Symposium (24-26 August). 


Anticipated by analysts, the PBoC is projected to reduce the LPR rates by 15 bps, mirroring its action with the MLF last week. These rate reductions align with the commitment of Chinese authorities to provide additional stimulus measures to boost the struggling economy. However, the rate cuts did not yield a positive response from the markets, as they likely desire more substantial measures to be taken. 


The upcoming data release of New Zealand Retail Sales Q/Q is anticipated to show a decline of -2.6%, compared to the previous -1.4%. Additionally, Core Retail Sales Q/Q is expected to be -2.5%, contrasting with the previous -1.1%. Unless there are significant unexpected deviations, the RBNZ is likely to overlook this data point. The central bank has expressed its contentment with the current interest rate level and indicated its willingness to navigate through potentially erratic data in the short term. 

We will also see the Preliminary PMIs for many advanced economies that are likely to lead the sentiment for the rest of the day: 

  • Australia Manufacturing PMI 49.6 expected vs. 49.6 prior. 
  • Australia Services PMI 47.9 expected vs. 47.9 prior. 
  • Japan Manufacturing PMI 49.5 expected vs. 49.6 prior. 
  • Japan Services PMI no forecast vs. 53.8 prior. 
  • France Manufacturing PMI 45.2 expected vs. 45.1 prior. 
  • France Services PMI 47.3 expected vs. 47.1 prior. 
  • Germany Manufacturing PMI 38.6 expected vs. 38.8 prior. 
  • Germany Services PMI 51.5 expected vs. 52.3 prior. 
  • Eurozone Manufacturing PMI 42.4 expected vs. 42.7 prior. 
  • Eurozone Services PMI 50.4 expected vs. 50.9 prior. 
  • UK Manufacturing PMI 45.0 expected vs. 45.3 prior. 
  • UK Services PMI 50.8 expected vs. 51.5 prior. 
  • US Manufacturing PMI 49.4 expected vs. 49.0 prior. 
  • US Services PMI 52.3 expected vs. 52.3 prior. 

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Description automatically generated with medium confidenceThe upcoming release of Canadian Retail Sales M/M is anticipated to show no change at 0.0%, compared to the previous 0.2%. Additionally, the Core Retail Sales M/M is expected to increase by 0.3%, contrasting with the previous 0.0%. While the possibility of another BoC rate hike in September is viewed as uncertain, the recent significant increase in wage growth and core inflation figures surpassing expectations could potentially provide enough grounds for the central bank to move forward with another rate hike. 

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Description automatically generated with medium confidenceThursday 

Each Thursday holds significance due to a critical data release: the US Jobless Claims. Both the Federal Reserve and the Market pay special attention to labor market data, as there is concern that ongoing labor market tightness could potentially trigger a cycle of rising wages and prices (similar to what is currently occurring in the UK), making it more challenging to effectively return inflation to its target levels. Forecasts indicate that Initial Claims are projected to be at 244K compared to the previous 239K, while Continuing Claims are anticipated to reach 1700K in contrast to the previous 1716K. 


Fed Chair Powell is scheduled to deliver a speech at the Jackson Hole Symposium at 14:05 GMT. Considering that the Federal Reserve will have another month of significant data releases before their next meeting, it’s improbable that Powell will diverge from his recent statements. He is expected to once again emphasize their reliance on data and maintain a flexible approach. Some experts suggest that Powell might adopt a dovish stance due to the recent declines in both stock and bond markets. However, it’s worth noting that Powell has been aiming for higher yields and lower equity prices for about a year now. With the market potentially aligning with these goals, it wouldn’t be a prudent strategy for him to make any statements at this point. 

Author: Jacky.T

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