The US dollar index is also trading below the 100 mark at the beginning of September. This week, investors are focusing in particular on monetary policy developments. Things are likely to get exciting with the release of new US labor market data next coming Friday. At the same time, the US Federal Reserve (Fed) is under pressure following the latest jobs report from the previous month.
Following the recent speech by Fed Chair Kevin Warsh at the annual central bankers' meeting in Jackson Hole, Wyoming, concerns remain justified that the Fed might turn the notorious interest rate screws upward in September. Warsh had pointed to increased inflation risks and thus fueled expectations of a rate hike.
US Dollar Index
Following the announcement of the buyback of long-term US Treasury bonds
In mid-August, the US Treasury had announced plans to double the planned buyback of so-called long-term government bonds, following which yields dropped only temporarily.
30-year US Treasury bonds
ISM Purchasing Managers„ Index and “JOLTs" below expectations – US job data casting shadows ahead
This afternoon, the ISM Manufacturing Purchasing Managers' Index was released, coming in at 54.6 points, which was below the prior expectations of 55.2 points and down from 55.6 points in July, as announced by the Institute for Supply Management (ISM). Even though sentiment in the US manufacturing sector has unexpectedly clouded over, the index remains above the growth threshold of 50 points.
The US Department of Labor's so-called „JOLTs“ came in lower than expected at 7.271 million job openings (7.330 million), compared to 7.182 million in June.
On Thursday, investors should pay attention to the publication of the counterpart (ISM Index) for the services sector (4:00 PM).
Later in the week, the US labor market data (Non-Farm Payrolls) will be on the agenda, particularly on Friday (2:30 PM). At the same time, the unemployment rate and average hourly earnings are also expected.
The CME Group's "Fed Watch Tool" now shows a 66.3 percent chance of a quarter-percentage-point interest rate hike on September 16. 33.6 percent of market participants expect a rate pause. The target rate band itself is currently between 3.50 and 3.75 percent.
