(Reuters) – As an abysmal August gives way to an uncertain September, investors’ attention turns to the path of rates as markets hope rates will peak soon. will support stocks and bonds.

However, September is full of risk factors: central bank meetings, the G20 summit and decisive data – not to mention that it is historically the worst month of the year for the S&P 500.

Overview of the market agenda for the next few days.

1/ WORRYING SEPTEMBER

After the Federal Reserve (Fed) conference in Jackson Hole, investors are preparing for a volatile month.

The S&P 500 tends to post its worst performance in September, with an average decline of 0.7% over the month, according to CFRA data compiled since 1945.

There is no shortage of catalysts for volatility: US inflation expected on September 13 should confirm the decline in consumer prices and the resilience of growth, which has boosted equities for most of the year.

Investors will also be watching Fed Chairman Jerome Powell’s message after the September 20 central bank meeting to determine the risks of a further hike this year.

A fourth U.S. government shutdown in a decade is also possible if lawmakers fail to reach agreement by Sept. 30, when the spending cap for the year will be hit. In terms of macroeconomic indicators, activity in the US service sector is expected on Wednesday.

In Europe, the European Central Bank (ECB) will have to decide on September 14 whether to raise its rates again or put them on hold. Market participants believe that persistent inflation and a resilient labor market warrant another rate hike before the end of the year.

PMI activity indicators due on Tuesday should confirm the slowdown in the European economy, which will make it more difficult for the central bank, faced with price momentum still above its target as the probability of a recession increases. .

2/ THE SICK MAN OF EUROPE

Germany is expected to be the only major economy to enter recession this year. Business activity contracted in August at the fastest pace in more than three years, the business climate deteriorated and the economy stagnated in the second quarter.

It’s no wonder the region’s economic engine is once again seen as the sick man of Europe.

Foreign trade data on Monday, July industrial orders (Wednesday) and industrial production (Thursday) as well as final inflation figures (Friday) could reinforce this perception and encourage the ECB to leave rates unchanged. in September.

Germany’s coalition has just approved a €7 billion-a-year corporate tax relief package to give the economy what Chancellor Olaf Scholz called a “big boost”.

But economists are skeptical, noting that the package represents just 0.2% of GDP and will not be a game changer.

3/ A MORE ENCOURAGING G20?

Progress over the summer to reach an agreement on the framework for managing the debt of emerging countries in default or close to default supported the sovereign bonds of Pakistan, Sri Lanka, Ghana and Zambia.

This improvement could, during the G20 summit in Delhi, encourage ongoing efforts to resolve the persistent and harmful debt crisis in developing countries.

Multilateral institutions and creditor countries have taken advantage of most international meetings to refine the agreement on the common framework, which is supposed to facilitate and accelerate the exit from over-indebtedness.

But the absence of Chinese President Xi Jinping in Delhi could weigh on the discussions. In recent years, China has become the biggest bilateral donor to some developing countries, and its reluctance to make bigger concessions as part of restructuring efforts has been a key sticking point.

4/ SMOOTH TRANSITION

The Reserve Bank of Australia is expected to keep rates unchanged for the third straight meeting on Tuesday as Governor Philip Lowe prepares to hand over to his deputy Michele Bullock.

A sharp slowdown in inflation portends a simpler outlook for Bullock, with Lowe’s tenure marked by painful setbacks and abrupt shifts that cost him a second term.

Rates are at an 11-year high of 4.1%, after tightening 400 basis points since May 2022. Traders believe this is the peak in rates as inflation unexpectedly eased to hit less than 5% in July, a 17-month low.

All will not be rosy, however. Economic risks in China, the main trading partner, are intensifying just as things appear to be improving.

5/ THE BANK OF ENGLAND ON A TIGHT ROPE

Is the British economy slowing enough for the Bank of England (BOE) to end its fight against inflation?

UK retail sales for August, as measured by the British Retail Consortium and released on Tuesday, may confirm consumer caution expressed by other indicators.

Sentiment deteriorated alongside the slowdown in the housing market, after 14 consecutive rate hikes. Monthly house price data released by Halifax on Thursday will indicate whether the UK housing sector has weakened further.

But the economy, which has so far resisted recession expectations, still has support.

Headline inflation fell to 6.8% in July, energy costs are expected to fall from October and real wages are now growing.

If this prompts Britons to return to the shops, it could bolster the BoE’s resolve to stay firm on inflation.

(Ira Iosebashvili in New York, Kevin Buckland in Tokyo, Dhara Ranasinghe, Libby George and Naomi Rovnick in London, compiled by Amanda Cooper, Corentin Chapron, edited by Blandine Hénault)

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