Weekly Wrap-Up

Last Week In Markets: Aug 23 - Aug 27 2021

Fisher Investments recaps the biggest market, political and economic news from last week, including Q2 201 US GDP data, US, eurozone, UK and Japan August Purchasing Manager Index (PMI) readings and eurozone money supply data.

In the US, August Markit Flash Manufacturing and Services Purchasing Managers’ Indexes (PMIs) fell to 61.2 and 55.2, respectively—both below estimates but remaining in expansionary territory (readings over 50 indicate expansion). The second estimate of Q2 2021 GDP growth was revised up to 6.6% annualized, modestly lower than anticipated. July new home sales rose 1.0% m/m, higher than forecast. July durable goods orders decreased 0.1% m/m, missing expectations. However, when excluding the more volatile transportation-related orders, durable goods orders increased 0.7% m/m. In a speech on Friday, Fed Chair Jerome Powell mentioned the central bank could start winding down its quantitative easing (QE) program later this year. While pundits will endlessly discuss Powell’s comments, central banker statements don’t have a predetermined market reaction and concerns about the Fed eventually ending QE are overwrought in our view. For more, please see our 08/26/2021 article, “Will Powell Surprise at Jackson Hole?

In the eurozone, the August Markit Flash Manufacturing PMI fell to 61.5, missing expectations, while the August Flash Services PMI declined to 59.7, in line with expectations. July money supply (M3) expanded 7.6% y/y, slightly lower than anticipated. In the UK, the August Markit/CIPS Flash Manufacturing and Services PMIs fell to 60.1 and 55.5, respectively.

In Japan, the August Jibun Bank Flash Manufacturing and Services PMIs were 52.4 and 43.5, respectively—both below consensus estimates. The Conference Board’s June Leading Economic Index (LEI) increased 0.2% m/m, in line with the consensus forecast. July imports and exports rose 28.5% y/y and 37.0% y/y, respectively—matching estimates.

The Week Ahead:

The US, UK, eurozone, China and Japan release final August manufacturing and services PMIs. Japan and the eurozone report July retail sales figures. Japan also releases July preliminary industrial production while the US reports August unemployment data.