S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
Brown Brothers Harriman’s (BBH) Elias Haddad notes the US Dollar (USD) is softer mainly against the Japanese Yen and Swiss Franc, with Brent Oil nearing $100. Haddad expects the Dollar to stabilize in the near term except versus the Japanese Yen, and sees elevated Fed rate hike pricing into the September FOMC, but ultimately anticipates a dovish repricing as the Fed holds rates.
Fed pricing and Dollar outlook
“The ADP August private payrolls data showed labor demand remains unimpressive. The economy added +38k private sector jobs in August (consensus: +47k) vs. +46k in July, the lowest reading since January. Of note, the correlation between monthly change in ADP private payrolls and nonfarm payrolls (NFP) is weak.”
“Meanwhile, the latest Fed Beige Book remained indicative of solid economic activity and stable labor markets. “The general outlook for the coming months was positive…Employment rose very slightly overall.” The inflation outlook was mixed.”
“August Services ISM is the other highlight (3:00pm London, 10:00am New York). The data should remain indicative of resilient demand and sticky inflation pressures. The headline index is seen at 54.1 for a second straight month, and the Prices Paid index is expected at 70.0 vs. 70.3 in July.”
“We expect USD to stabilize in the near-term, except against JPY. Fed funds rate hike pricing will remain elevated into the September 16 FOMC decision, with the August CPI print on September 11 the decisive test.”
“We don’t expect the FOMC to hike this month, which will ultimately lead to a dovish repricing against USD. Wage growth is consistent with the Fed’s 2% inflation target, and Fed policy is already somewhat restrictive, assuming a nominal neutral rate of 3.00%.”
