Aug 26, 2022 01:21AM ET
By: AnalysisWatch
Global economic anxiety is rising, and the closely watched monthly US jobs report and European inflation figures will be released next week at a key time for markets and central banks.
A review of manufacturing activity in China is also due, while the euro threatens to push decisively below the key $1 mark.
Nonfarm payrolls increased by 528,000 jobs in July, the largest gain since February. According to Reuters, the first estimates for August call for a 290,000 increase.
Eurozone inflation remains uncomfortably high, as Wednesday's flash consumer price index for August is likely to show. This will only increase the pressure on the European Central Bank to hike rates again in September, even as recession risks mount.
Instead of reaching its recent peak as hoped just a few weeks ago, inflation could soon reach double digits. In July, it reached 8.9% year-on-year-well above the ECB's 2% target.
The source of the new inflationary anxiety is clear: rising natural gas prices, which have risen again after Russia signaled a new restriction on gas supplies to Europe.
Gas prices rose 45% in August and 300% this year. From now on, it depends on when inflation in the euro area will finally peak. As one economist put it, we are all now becoming gas watchers.
Next week, the moribund Chinese economy may continue to lead the US and Europe in reporting dismal manufacturing data.
Consumer and business confidence continue to be affected by the ongoing real estate crisis. And now a searing heat wave is also hampering manufacturing.
The euro/dollar exchange rate is increasingly correlated with natural gas prices, and investors and analysts are forecasting further weakness as Russia continues to curb its exports.
The US stock market's rebound has lost some of its steam just as it enters its most treacherous month on average.
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