WHAT MOVED THE MARKET THE BIGGEST STORIES THAT MATTERED FOR THE MARKET LAST MONTH...
The markets observe Purchasing Managers' Index (PMI) data as an indicator of the direction of growth. Data in all three regions were more or less in-line with expectations and prior period numbers. This helped to boost market sentiment that the global growth picture could be firming. September 3 North Korea tests and detonates a hydrogen bomb. This action – North Korea's sixth and largest test to date – drew a warning of "massive military response" from the U.S., roiling global stock markets and increasing demand for safe-haven investments such as gold. August 31-September 10: Hurricanes Harvey and Irma bring pain for U.S. energy and insurance sectors. Hurricane Harvey struck the Gulf Coast of Texas as a Category 4 storm, creating a major flooding event and knocking refining capacity off-line. Houston, a vital center for the U.S. energy industry, houses a large portion of the nation's refining capacity. This lack of refining demand due to shutdowns negatively impacted gasoline production. The storm also put pressure on the insurance space due to exposure fears. Hurricane Irma made landfall in Florida as a Category 4 storm as well. While Florida lacks the refining capacity of the Texas Gulf Coast, it is home to 20.6 million people. Many were forced to flee ahead of the storm, which also weighed on oil due to the potential impact on
August 24-26 The Federal Reserve's 2017 Economic Policy Symposium. The Jackson Hole conference was expected to be a catalyst for European Central Bank (ECB) President Mario Draghi to discuss a pickup in regional growth and ease investors into the idea of winding down quantitative- easing measures put in place to boost liquidity. Mr. Draghi's speech came as a bit of a disappointment to the markets. While he did say the global and European financial systems are in a better place now than before the financial crisis, he failed to mention any type of stimulus action, causing yields to pull back. August 30-31 Revised second-quarter U.S. GDP and PCE reported. We noted last month that the Fed would be paying close attention to these data to aid their decision on when to begin the balance sheet unwind. The GDP number came in at 3%, better than the 2.8% expectation, and the Personal Consumption Expenditures (PCE) number of 1.4% was in-line with expectations. These data probably have the Fed leaning toward commencing the balance sheet runoff this month, and hiking the federal funds rate one more time in December. September 1-8 Markit releases August PMI data for China, Europe, and U.S.
EDITORS
Scott Garliss
John Gillin Greg Diamond
14 | September 2017
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