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IBERIAN DAILY 26 AUGUST (ANÁLISIS BANCO SABADELL)

Powell’s turn in Jackson Hole
Following a bullish opening underpinned by the new stimuli in China, the main European indices closed with mixed results given the worries on inflation and high energy costs (new gas price record in Europe). In the Euro STOXX, Energy and Construction posted the biggest gains, with Banks and Retail bringing in the rear. On the macro side, in the US weekly jobless claims came in below expectations, and the second reading of the 2Q’22 GDP was better than expected (but still in negative ground). As for the initial statements out of Jackson Hole, the Kansas Fed chairman defended a continued rise in rates to 4% (over some time) in order to slow demand and J. Bullard was in favour of rates at around 3.75%-4% before the year-end, with the risk of seeing higher inflation for a longer period of time. In Germany, both the current conditions and expectations components of August’s IFO beat expectations. In the euro zone, the ECB meeting for the July 21 meeting showed two important aspects: one, that members are willing to raise interest rates by +50bps in the upcoming September meeting; and two, that the use of the antifragmentation tool still needs a full agreement to be deployed in the case peripheral debt premiums become stressed (ECB hawks wish to avoid using the tool).
What we expect for today
European stock markets would open with gains, spurred by the strong performance by the tech sector and by the rising Asian market. Currently, S&P futures are down -0.12% (the S&P 500 ended up +0.84% vs. the European closing bell). Volatility in the US fell (VIX 21.78%). Asian markets are rising (China’s CSI 300 +0.01% and Japan’s Nikkei +0.57%).
Today in the US we will learn Powell’s statements from Jackson Hole, July’s personal income and outlays and August’s U. of Michigan consumer confidence. In debt auctions: Italy (€ 6 Bn in 6M t-bills).