Today, Kevin Kidney, Head of Asset Allocation, looks at the official UK employment data for the 3 months through to June which shows growth in both full-time and part-time jobs. Of key importance to inflation-watchers will be the deceleration in wage growth, it may seem counterintuitive, but lower wage growth allows more room for the Bank of England to lower interest rates further. For wider context, the UK now has lower unemployment, lower inflation and higher wage growth than the US.

As we look to the week ahead, Jeff Casson, Chief Investment Officer, turns our attention from the US to Europe and the potential for another interest rate cut from the European Central Bank. With most data pointing to a weakening economic backdrop, expectations are for a further 0.25% cut and the market will be wanting to hear any signals as to the trajectory of further cuts in the coming months. In the US, the focus will revert to inflation with the upcoming CPI report this Wednesday, but the markets will pay particular attention to the next Presidential debate on the 10th to asses both candidates who are separated by a fine margin. We finish up with China and the credit data which will give the market the first option to asses the impact from July policy changes.

This week, Kevin Kidney, Head of Asset Allocation, and Matt Henderson, Portfolio Manager, focus on US employment and its swift movement back towards a healthy balance, which was confirmed earlier in the week with the Job Openings and Labour Turnover data. The market reaction from an equities perspective was negative but bonds rallied, providing an offset which demonstrates the importance of multi-asset diversification in investing. We finish with the Non-Farm Payroll data and a look back over the 50 year average for US jobs growth which helps provide context for the normalisation that we’re seeing.

Today, Kevin Kidney, Head of Asset Allocation, looks at the slowing of the US ‘jobs’ economy as the Job Openings and Labour Turnover Survey (JOLTS) data which provides why the reasons remain constructive. The survey from the Bureau of Statistics has three key areas, job openings, hires, and quits and is a timely indicator of the health of the US labour market. This leads us into tomorrow’s US Non-Farm Payrolls data, the main employment survey, will there be evidence that the job market has fully recovered? 

Today, Chris Leyland, Investment Director, looks at US manufacturing data which despite moving in a positive direction, came in below expectations yesterday and remained in contractionary territory. Despite political uncertainty with upcoming elections and 5 months of contractionary figures, the prospect of interest cuts from the Federal Reserve is expected to lift manufacturing. Elsewhere, equity markets had a particularly weak day but UK and US sovereign bonds rallied which highlights the importance of diversification.

Matt Henderson, Portfolio Manager, looks at the contrasting economic backdrops of Europe and the UK where in Europe we see higher interest rates and energy prices impacting the manufacturing sector. UK manufacturing is seeing a different outcome with new orders rising rapidly and output reaching a 2.5 year high which has caused an increase in employment. Similarly UK retail sales had their highest reading in 5 months with a 0.5% rise boosted by the warmer weather.

With the US interest rate decision on the horizon, Jeff Casson, Chief Investment Officer, looks at upcoming reports which will have a factor in the Federal Reserve’s decision. For investors, the main event is Friday and the unemployment report, looking back to August and the non-farm payroll data was the catalyst for a difficult start to the month, will September’s figures lead to a similar outcome? We also have the ISM manufacturing and services indices and the key focal point will be whether the manufacturing sector shows improvement despite being in contractionary territory. The date from Europe is anticipated to highlight the challenging backdrop for Eurozone manufacturing but show an ongoing recovery in consumer sentiment.

This week, Paul Durrans, Investment Director and Matt Henderson, Portfolio Manager, look at the comments made by the US central bank chair Jay Powell at the annual conference in Jackson Hole. Jay Powell gave his strongest indication yet that the US central bank is ready to cut interest rates next month. The key question is whether it will be a 0.25% or 0.5% interest rate cut next month? The team reflect on the latest economic growth and inflation data this week which will be important to the decision. The team also discuss the encouraging inflation data from Europe which is trending better than expected and should give the European Central Bank the confidence to lower interest rates again in the coming months. We finish on Nvidia which despite beating analyst expectations fell in value by -6.4%.

Kevin Kidney, Head of Asset Allocation, looks at the second quarter earnings data that came in yesterday that puts Nvidia ahead of analyst expectations with positive results and an approval of $50 billion in share buybacks, but why did the share price fall in after hours trading? We also look into the Richmond Fed Services activity data that corroborates the Federal Reserves intention to lower interest rates as of September and over in Europe, data from Spain will embolden the European Central Bank to further lower policy rates at next month’s meeting.

Today, Kevin Kidney, Head of Asset Allocation, digests the comments from Prime Minister Kier Starmer on the direction of the UK economy and the difference beween political aspiration and reality. With forecasts from the Office for Budget Responsibility reporting that welfare spending may increase 40% over the next 6 years whilst economic growth is expected to only increase 25%, more tax rises will be ahead.