1. Janet Yellen, the chairwoman of the Federal Reserve (Fed) sure gave analysts something to talk about — or rather, something to not talk about. Much of her speech just confirmed the Fed's most recent policy statement. However, she did offer up a little taste of something new — and it could potentially mean a sooner-than-later rate hike.
"We already knew there are sharp divisions in the FOMC over the 'real' strength of the US labor market (is unemployment 6.2% or 12.2%?), and we knew that Yellen leans towards the latter," Rabobank Global Daily wrote in a note to traders Sunday. "All we had confirmed by her is that if the labor market improves fasters than expected (and it has so far not been doing so — or it has been — depending on who you listen to), then a Fed tightening cycle would be brought forward. And if it doesn't, then post-QE rates will remain on hold for a considerable period."
2. Next up to the plate of market-moving monetary policymakers was Mario Draghi, president of the European Central Bank (ECB). The euro area has been struggling to boost inflation, and economists alike are worrying that the common currency area could be sinking into a hard-to-break pattern of deflation similar to that of Japan. Speaking from Jackson Hole, Draghi also offered up his own surprise: a rather blunt and unexpected criticism of the austerity measures that many blame for worsening the euro crisis. Nevertheless, he failed to hint that the ECB would go down the QE route that the Fed is now winding down.
"With 10-year Bund yields hitting 0.96% before he spoke, but then rising back over 1.0% briefly afterwards, there are indications that – controversial as it might sound — maybe, just maybe, counter-cyclical fiscal spending could perhaps be more beneficial for the European economy than pro-cyclical austerity, especially for countries that can't devalue their currency within the euro zone, and which are already experiencing deflation," Rabobank said in its note.
3. The Bank of England (BoE)'s Monetary Policy Committee (MPC) saw two members vote in favor of a rate hike at its August meeting according to the minutes — marking the first voting split on the rate within the committee since July 2011.
4. The Fed minutes from the central bank's July meeting also showed a more hawkish tone, showing a growing number of officials now favor a sooner rate hike in light of the country's labor-market progress.
5. US existing home sales continued their streak in July, this time jumping to their highest level in 10 months.
6. UK retail sales saw a slight slip-up in July, worsening from the previous month and coming in below expectations.
7. US housing starts came back with a boom in July.
Next up?
This week stateside, traders will focus on Friday's personal income and spending data, with fresh durable goods orders also in focus.
In the EU, meanwhile, traders will be eyeing a heavy load of data — namely CPI and GDP figures, plus developments in the crisis surrounding Ukraine.
Happy trading!
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