LIVE MARKETS-Central bank status quo set for Jackson Hole test

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CENTRAL BANK STATUS QUO SET FOR JACKSON HOLE TEST

The big three major central banks - the Fed, ECB and BOJ - all kept their interest rates unchanged at their last meetings, but things might be about to change and the Fed's Jackson Hole symposium could give us a clues on when.

The most interesting of the three currently is probably the Federal Reserve. Soft labour market data in July pushed markets to fully price in a rate cut next month, but this week's inflation figures included some concerning underlying price pressures.

Growth data has also remained resilient, according to Barclays, which means increasingly dovish rates expectations are diverging from positive economic surprises.

"No wonder equities are having a good time, as the combination of resilient data/earnings and lower yields has revived the Goldilocks narrative," writes Barclays head of European equity Strategy Emmanuel Cau.

Fed Chair Powell's speech at Jackson Hole next week will therefore be closely watched, as his guidance on the rate outlook could affect market pricing.

"In the near term, this seems to be the main risk to equities in what has been otherwise an unusually quiet summer," Cau adds.

(Samuel Indyk)

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