European equity markets are expected to open a little lower on Monday following a broadly negative session in Asia, as investors look ahead to a relatively quiet week with Janet Yellen headlining on Friday with her speech at Jackson Hole.
The Jackson Hole event has previously been a platform for the Federal Reserve to provide more clarity to the markets and warn about upcoming policy changes, something the market is currently in desperate need of. The Fed has done a fine job recently of confusing investors at every possible opportunity.
The minutes last week didn’t offer any further clarity and the only message we can take away from Fed policy makers at the moment is that if they’re lacking a consensus view as much as they appear to be, a rate hike surely can’t be on the cards soon. The issue with the Fed is that it keeps drilling into us that they want to raise rates again this year but the markets just aren’t buying it, there is a serious credibility issue here.
Yellen has a great opportunity this Friday to send a clear and concise message to investors, the problem being that I don’t think anyone would be surprised if we’re once again looking back on this as another missed opportunity. The markets currently have March priced in for the next rate hike and if Yellen is seriously determined to move earlier, she must take advantage of Friday’s opportunity to drive that message home.
The rest of the week is expected to be rather quiet with no major economic data scheduled for release today. Oil will likely remain a key story this week having made substantial gains last week on the belief that OPEC could agree on a production freeze next month, something I remain quite sceptical about. It’s currently down more than 1% today but Brent remains above $50 a barrel and compared to last week’s gains, these moves are relatively minor, possibly even just profit taking.
For a look at all of today’s economic events, check out our economic calendar.