Stocks Swoon As Wait For Jackson Hole Goes On

WHERE WE STAND – Watching markets was, again, akin to watching paint dry yesterday, at least outside of the equity complex.

Hence, allow me to get back onto my soapbox once more for a moment, as the ONS seem to have descended further into shambles. This time, the UK’s stats office have revealed that, just three days before scheduled publication, the release of Friday’s retail sales figures will be delayed until early-September, due to yet another round of data quality issues.

Frequent observers of the UK economy will know that this is not the first time we’ve heard such a tale. It was over two years ago that the ONS revealed it was unable to produce accurate statistics on the UK labour market. Since then, we’ve also had various data quality issues with inflation, trade, and growth stats, before the latest shambolic episode in this saga yesterday. There is, of course, also the significant risk that there are yet-to-be identified errors plaguing other ONS data series.

What we have here, in short, is a statistics agency that is, for whatever reason, patently incapable of producing any sort of accurate statistics, and is failing at almost every aspect of the one job that they’ve been given. Quite obviously, this is a grave issue, chiefly as it means that both fiscal and monetary policymakers, as well as market participants, are ‘flying blind’, lacking a clear, accurate, and reliable picture of how the UK economy is evolving.

I’ll end that rant here, before my blood pressure gets any higher.

Still, even without entirely accurate ONS data, it’s pretty safe to say that the UK economy remains stuck between a rock and a hard place, with growth risks clearly tilted to the downside, and Gilts selling off further yesterday, as the benchmark 30-year yield touched its highest levels since 1997. That fiscal ‘black hole’ is only getting deeper, and with no easy or political palatable way out for the Chancellor, I stay short the long-end of that Gilt curve.

Outside the UK, there is little to write home about once more. Geopolitical noise continues to rightly be ignored, the stream of tariff headlines has slowed to a trickle, and the data docket yesterday was again light. Markets, as such, did relatively little of interest, as stocks took a bit of a lurch lower, Treasuries remain rangebound, G10 FX again traded in subdued fashion, and gold remains as flat as a pancake.

While the dip in equities is likely to be bought in relatively short order, especially when yesterday’s decline was almost entirely tech-driven, and over half the SPX closed in the green, I highly doubt that the rest of that will change until we hear from J-Pow at Jackson Hole on Friday afternoon.

Overall, though, regardless of what Powell says, where my base case is that the Fed Chair retains his ‘wait and see’ approach, I retain my bullish equity, bearish USD, and bearish long-end UST stances, even if cross-asset moves are panning out at a frankly glacial pace right now.

LOOK AHEAD – A handful of notable items on the docket today, though again I’d expect conviction to be relatively limited ahead of Jackson Hole.

The data highlight comes here in Blighty, with the July inflation figures due this morning. Headline CPI is set to have risen 3.7% YoY last month, with the BoE having pencilled in a 4% peak in September, while services inflation is also set to have accelerated 0.1pp on the month, to 4.8% YoY. I’d argue there’s not really a ‘good’ print for the quid here, as a soft figure would spur expectations that the BoE will cut at the next ‘live’ meeting in November, while a hot figure would only reignite concerns over the stagflationary economic backdrop.

Elsewhere, on the policy front, the Riksbank will stand pat on rates this morning, while minutes from the July FOMC meeting tonight are unlikely to provide much by way of fresh information, especially with Govs Bowman and Waller having already comprehensively explained their dovish dissents at that meeting.

Besides that, final July eurozone inflation figures, as well as a 20-year Treasury sale, plus earnings before the open from Target (TGT) are all worth at least a cursory glance.