Guardian Weekly Market Report – Issue 185

Reports of Note Due This Week

The coming week is dominated by the Federal Reserve’s September policy meeting on Wednesday. Markets overwhelmingly expect the FOMC to leave the policy rate unchanged, but traders will scrutinize the Summary of Economic Projections and Chair Powell’s press conference for clues on the path of future cuts. Before the Fed, Tuesday’s NAHB/Wells Fargo Housing Market Index will provide a timely gauge of builder confidence, and the 20‑year Treasury bond auction later that day will test investor appetite for long‑duration government debt. Retail sales on Wednesday morning are the only major data release ahead of the Fed decision and could move expectations if they surprise. Thursday’s initial jobless claims and a 10‑year TIPS auction round out a week that may set the tone for precious metals into the fourth quarter.

• Tuesday, Sept 16 – 10:00 AM ET – NAHB/Wells Fargo Housing Market Index (Sep)
  – Measures U.S. homebuilder sentiment; a sharp drop would signal housing market stress
• Tuesday, Sept 16 – 1:00 PM ET – 20‑Year Treasury Bond Auction (Reopening)
  – High‑stakes reopening of long‑duration U.S.
• Wednesday, Sept 17 – 8:30 AM ET – Retail Sales (Aug)
  – Key gauge of consumer spending.
• Wednesday, Sept 17 – 2:00 PM ET – FOMC Summary of Economic Projections, Statement & Interest‑Rate Decision
  – The Fed releases updated economic and interest‑rate projections, followed by a policy statement.
• Wednesday, Sept 17 – 2:30 PM ET – Fed Chair Powell Press Conference
  – Press conference where Powell elaborates on the FOMC decision and outlook.
• Thursday, Sept 18 – 8:30 AM ET – Initial Jobless Claims
  – Weekly measure of labor‑market.
• Thursday, Sept 18 – 1:00 PM ET – 10‑Year TIPS Auction (Reopening)
  – Important for inflation‑adjusted yield expectations

Geopolitics

China’s economy slowed further in August as key indicators missed expectations, highlighting weak domestic demand and the drag from Beijing’s efforts to reduce industrial overcapacity. Retail sales rose 3.4% year-over-year, below forecasts and easing from July’s 3.7%. Industrial output grew 5.2%, its weakest since August 2024, while fixed-asset investment expanded just 0.5% in the first eight months, with real estate investment plunging 12.9%. Growth was mainly supported by state-led spending in infrastructure and high-tech sectors, while private sector investment contracted. Unemployment ticked up to 5.3% amid graduation season. Consumer prices fell 0.4% and producer price deflation persisted, signaling fragile demand. Interestingly, jewellery sales surged 16.8%, showing resilient appetite for gold and silver. Economists expect further consumption weakness ahead and warn that only targeted, incremental policy easing is likely, with Beijing reluctant to launch a large-scale stimulus unless its 5% growth target is at risk.

France’s government was thrown into renewed crisis after lawmakers ousted Prime Minister François Bayrou in a no-confidence vote, 364-194, over his plan to cut €44 billion ($51 billion) from next year’s budget. The move forces President Emmanuel Macron to appoint his fifth prime minister in just 20 months, underscoring the instability of his minority government. Bayrou’s removal follows the December ousting of Michel Barnier, marking two such votes within nine months – rare in modern French politics. The National Assembly, split between left- and right-wing blocs, has repeatedly united against Macron’s centrist leadership, leaving the government vulnerable. The turmoil comes as France struggles with rising living costs, debt at 5.8% of GDP, and mounting investor concerns. Protests are expected midweek, fueled by opposition leaders like Jean-Luc Mélenchon and Marine Le Pen, who argue Macron himself should resign. The crisis likely persists until the 2027 presidential election.

Israel carried out an airstrike in Doha, Qatar, targeting Hamas’ senior leadership in a major escalation of its regional conflict. The strike, which hit near embassies and residential areas, killed a Qatari security officer and others but left Hamas’ top figures alive, including negotiator Khalil al-Hayya, though his son and office director died. Israel confirmed the strike was an independent operation, while Qatar condemned it as a “cowardly attack” and violation of sovereignty, threatening a review of its mediation role. The U.S. criticized the move, with the White House stressing it undermines ongoing ceasefire talks, though Washington was notified only shortly before the strike. The attack drew strong rebukes from Saudi Arabia, the UAE, and the U.K., heightening concerns of further destabilization. The incident also cast new doubt over hostage negotiations, with families warning the strike endangered the remaining captives in Gaza.