More easing on the Horizon
The tone of both Powell’s and Lagarde’s comments over the past week has been relatively accommodative – hinting for more easing to come in the next months
- Powell speaking in Nashville reiterated confidence in inflation heading to 2% target with policy moving therefore to a more neutral stance…
- …with decisions being taken meeting by meeting depending on the incoming data
- On the same tone Ms. Lagarde said that ECB is also becoming more optimist on inflation – with investors ramping up bets on a cut in October
- Eurozone inflation dropping below 2% for first time since 2021 (CPI for September at 1.8%) strengthens such a view – market pricing over 90% chance of October cut
Payrolls as important as ever
Non-farm payrolls out on Friday – will be highly monitored by market with regards to size of next move by Fed given the weak PCE price index last week
- Payrolls expected at +150k in September (vs. 142k in August) with unemployment at 4.2% (unchanged)
- Such an outcome would be consistent with a 25bp cut by Fed at next meeting – in line with Powell’s comments earlier this week…
- …especially after August core PCE price index increased 0.1% from July (below expectations of 0.2%) indicating a cooling economy
- But another jumbo cut by FED can’t be ruled out just yet
Harris vs Trump : future of America
• Donald Trump and Kamala Harris offer strikingly different visions of the economy 
- One thing seems clear: under both leaders US debt will continue to rise. Bloomberg Economics estimates that Trump’s tax cuts could take it to 116% in 2028, and under Harris’ more conservative proposals it would stay on a path to 109%
Statements by European companies
At a European equity conference, we talked to various companies, these are the key triggers:
- Small & Mid cap companies see a higher probability of a recession in Europe, caused by anti-competitive and structural framework conditions
- International players expect ongoing weakness in Europe and await the outcome of the US elections
- Grids & electrification, decarbonization, AI and data center companies continue to see strong growth and full order books
- India is on the way to be the most dynamic market for globally operating Europeans, while they expect prolonged turmoil in China’s economy and politics
- Competition on international markets from Chinese conglomerates is rapidly increasing
Disclaimer
The information, products, data, services and instruments contained or described in this publication are for information purposes only and constitute neither an advertisement or recommendation nor an offer or solicitation to buy or sell any product.
The financial products described in this publication are not suitable for all investors. The information contained in this publication does not represent any financial, legal, tax and/or other recommendations. Any investment or other decision should not be made solely on the basis of this document. Before making any investment decision, it is recommended that you seek a thorough examination of your situation and the advice of a qualified specialist.
Although the information contained in this document has been compiled by PKB on the basis of or with reference to sources, materials and systems believed to be reliable and accurate, PKB does not guarantee its currency, accuracy or completeness.
PKB accepts no liability, to the fullest extent permitted by applicable laws and/or regulations, for loss or damage of any kind arising directly or indirectly from the content, accuracy, completeness or otherwise of the content or any third party content referred to in this publication.
The analyses and forecasts contained in this publication are based on assumptions, estimates and hypothetical models which may prove to be incorrect and therefore lead to substantially different results.