Week ending 27th August 2021.


There was plenty of finger-tapping in the office this week as we waited for Jay Powell, the Fed Chair, to speak at the annual Jackson Hole symposium earlier today (3pm UK time).

Fed policymakers have been talking more and more recently about tightening monetary policy – and consequently, the start date and the pace of tapering QE (bond-buying program); and US interest rate increases have been weighing on market sentiment.

Given all the speculation of what may or may not be said, these events often turn out to be a damp squib, but not this time.

In fact it was music to our ears!

While Jay Powell confirmed that it was appropriate to start tapering the Fed’s $120bn a month QE program this year, he also gave assurances that tapering would be slow and based on economic data.

And more importantly, he made it very clear that the Fed’s decision to taper its QE program did not mean it was going to start raising US interest rates – which not only confirms to us that US interest rates are unlikely to rise anytime soon (something that we have been repeatedly saying in these market commentaries), but is also great news for global equity markets.

Looking ahead to this coming week, our focus will be on both OPEC’s production meeting on Wednesday (1 September 2021) and Friday’s (3 September 2021) US employment data (which covers non-farm payrolls; unemployment rate; participation rate; and average earnings), as both have an impact on the Fed’s dual mandate of inflation (the oil price) and employment (as the rapid spread of the Delta variant may be harming the employment recovery).

Additionally we have US ISM; US factory orders; Eurozone & Japanese retail sales; Eurozone CPI; Chinese PMI; and Japanese industrial production.

Investment Management Team