Powell stays the course in Jackson Hole
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Insights and Market Perspectives

Powell stays the course in Jackson Hole

Author: Portfolio Specialist Group

August 27, 2018

AGF Weekly Perspectives

“A recap of last week’s top economic news and what’s to come”

Fed Chairman stays the course

  • U.S. Federal Reserve (Fed) Chairman Jerome Powell delivered a highly anticipated speech at the Jackson Hole symposium on Friday. In a slightly less hawkish speech, Powell described a risk management approach to monetary policy and stressed a cautious approach.
  • Powell also noted “inflation has become much less responsive to changes in resource utilization”, suggesting that persistently low inflation levels may not be as troubling for the Fed as some believe.
  • “Further gradual increases” of interest rates point to a September hike, now fully priced into market expectations.

U.S. housing momentum slows

  • U.S. existing home sales fell to a two-and-a-half year low after slowing 0.7% in July, a fourth-straight decline. Condo sales accounted for most of the downturn, falling 4.8%, while multi-family sales were down a modest 0.2%.
  • New home sales also disappointed with a 1.7% decline, falling to a nine-month low in July.
  • Despite slowing momentum, housing supply remains tight with homes typically staying on the market for 27 days, down from 30 days at this time last year.

Canadian retail sales pull back

  • Canadian retail sales slid 0.2% in June, though a pullback was expected after a sizable 2.2% advance in the prior month.
  • Six of eleven categories reported slower growth, with autos and gasoline sales the largest contributors to the decline.
  • Online shopping continues to widely outpace bricks and mortar retailers with e-commerce sales up 18.0% annualized and well ahead of overall retail sales growth of 3.9% annualized.

Other economic news

  • The Eurozone Manufacturing PMI index slowed to a 21-month low of 54.6 in July. The U.S. also declined to 54.5 while Japan’s manufacturing activity moved 0.2 higher to 52.3.
  • Japanese inflation rose 0.9% annualized in July, while the “core-core” index closely watched by the Bank of Japan rose only 0.3%. A decline in cell phone charges and a slowdown in the pace of energy price growth held back price pressures during the month.

What’s to come

Canadian GDP

  • Canadian GDP for the second quarter headlines a quiet week of economic data. Overseas, eurozone inflation for the month of August will be released on Friday.

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About AGF Management Limited

Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.

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