Daily Economic Outlook: 27th August 2015

Against a backdrop of lingering uncertainty about the outlook for the Chinese economy, the opening of the annual Jackson Hole symposium will provide a venue for central bankers, finance ministers and academics to ruminate on its implications for global financial markets and monetary policy. 

With Fed Chair Yellen expected to be absent from the proceedings, the symposium is an unlikely venue for the Fed to explicitly signal its policy intentions in advance of the September FOMC meeting, but comments from other attending Fed speakers, including Vice Chair Fischer, will still be closely watched. With global downside risks pertaining to China appearing to crystallise and market pricing accordingly paring back the probability attached to a September liftoff from the FOMC, any indication that the Fed is inclined to look through the recent volatility would come as a sharp surprise, says Lloyds Bank.

Meanwhile, market developments continue to contrast with evidence of solid underlying US economic activity. Expected upward revisions to the estimated pace of US GDP growth in Q2 on the back of firmer retail sales and residential investment should entrench an impression of a brisk recovery from the Q1 soft patch. Weekly jobless claims figures are also expected to confirm the continued health of the US labour market, leaving the apparent absence of inflationary  pressure as the biggest source of domestic anxiety for the Fed, adds Lloyds Bank.