Following on the heels of Fed Chair Warsh’s forceful speech at Jackson Hole last Friday, the data docket picks up this week with the main event being Friday’s August employment report. Chair Warsh’s Jackson Hole speech was uber hawkish. He emphasized the importance of the inflation target (reiterating that the Fed’s target is PCE inflation) and implied that the Fed may need to act if disinflation is not occurring “with speed.” Interestingly, Warsh downplayed dovish signals from recent inflation and labor data. But we had expected this from him as there was no other way long end US bond yields could have been tamed. For Aug NFP we estimate 65k and UR at 4.0% with AHE at .4% MoM. In other US macro data this week, we have JOLTS, ISM manufacturing & ISM services. On Fed's policy itself, we believe Fed is likely on hold for REMCY26 as inflation momentum is waning & Fed typically does not do a hawkish pivot in an election year since 1990. There is no dated UST supply this week. In RoW events we have the critical Eurozone HICP inflation figures for Aug where we expect an uptick in headline to 3.4% YoY and core to 2.7% YoY. We also have the Bank of Canada's rate decision on Wedneday where we expect a hold. China also has it's official PMI data release on Monday where we expect some recovery due to recently announced government stimulus measures in line of slowing growth momentum.
