This week's US PCE inflation data strengthens the prospect of the Fed's less aggressive rate cut starting next month. Consumer spending continues to exceed all expectations, clearly indicating that the US economy continues to maintain a good momentum and is growing steadily and above trend. The 25 basis point rate cut in September is considered to be basically a done deal, and expectations for a significant rate cut have cooled.

After the PCE release, the US dollar index accelerated to a one-week high, but still recorded the largest monthly decline in nine months in August. The two-year US Treasury yield fell by more than 33 basis points in August. The three major US stock indexes rose collectively, with the Dow reaching another record high and the S&P 500 Index nearing its historical high. The S&P 500 Index rose by 2.28% in August, the Dow rose by 1.76%, and the Nasdaq rose by 0.65%.

Due to the simultaneous strength of the US dollar and US Treasury yields on Friday, commodities were suppressed. In addition, several representatives of the OPEC+ alliance have stated that they expect to push for increased production. US oil futures fell by over 3% at the close, with a cumulative decline of 5.6% in August. COMEX December gold futures fell back in the week, erasing the entire week's gains, with a cumulative decline of 0.73% for the week and a cumulative increase of 2.2% for August. Silver futures fell by 0.42% in August, and spot silver fell by 0.49% in August.

The market focus has now turned to the crucial August labor market data next week, and the Fed still hopes that the non-farm payrolls report will not add pressure for a 50 basis point rate cut. The threshold for a 50 basis point rate cut is also high and may require a substantial weaker-than-expected increase in non-farm employment, such as growth of less than 0.1 million people.

The following are the key points that the market will focus on in the new week (all in Beijing time):

Central Bank Updates:

Fed: Next week's data may determine whether the Fed will cut rates by 25 or 50 basis points in September.

At 02:00 on Thursday, the Federal Reserve will release the Beige Book on economic conditions.

At 20:45 on Friday, FOMC permanent voter, New York Fed President Williams, will deliver a speech.

At 23:00 on Friday, Federal Reserve Governor Waller will deliver a speech on the economic outlook.

Next week, two important Federal Reserve officials will deliver speeches, and the Federal Reserve's Beige Book will reveal more details about the US economic conditions. Cameron Dawson, Chief Investment Officer of Newedge Wealth, stated that investors have seen another sign of a soft landing – inflation will fall or at least not accelerate, while individual income still has elasticity and is growing at a healthy pace, not at the expense of economic growth. If people see that economic growth remains resilient, this indicates that the Federal Reserve does not need to respond urgently, but it is also worth noting that this may indicate that the Federal Reserve has room to adjust interest rates.

The current consensus is that the Federal Reserve will begin its easing cycle next month, cutting interest rates four times (25 basis points) by December.

Naeem Aslam, Chief Investment Officer of Zaye Capital Markets, commented that the Federal Reserve's plans depend on next Friday's non-farm payroll data. If investors expect a 50 basis point rate cut, that may be a bit hasty. From a macro perspective, we believe that the labor market is not that weak. If next week's data is weak, it will only be a bump in the road. Therefore, the Federal Reserve's approach is more likely to be gradual.

Other central banks: The Bank of Canada may cut interest rates next week.

At 21:45 on Wednesday, the Bank of Canada will announce the interest rate decision until September 4th.

Canada's second-quarter economic growth rate was higher than expected, but the per capita GDP decline and weak household consumption are expected to prompt the Bank of Canada to cut interest rates for the third consecutive week next week. Overall, Canada's economy grew steadily in the first half of this year, mainly due to population growth. This may help the country avoid an economic recession. However, households are facing pressure from high borrowing costs. Andrew Grantham, economist at the Canadian Imperial Bank of Commerce, said, 'Entering the third quarter, the economic momentum is weak, which provides sufficient reason for the Bank of Canada to continue cutting interest rates.'

A Reuters survey shows that all 28 economists interviewed believe that the Bank of Canada will cut the overnight rate to 4.25% on September 4th. Of the 28 economists, 20 believe that the Bank of Canada will cut the overnight rate to 3.75% by the end of 2024, 7 believe it will be cut to 4.00%, and 1 believes it will be cut to 3.50%.

Important data: US ISM data and non-farm payrolls may trigger market volatility! Can gold overcome the 'September curse'?

Monday 09:45, China's Caixin Manufacturing PMI for August.

Monday during the European session, final Manufacturing PMI for August in France/Germany/Eurozone, Manufacturing PMI for August in the UK.

Tuesday 22:00, US Manufacturing PMI for August.

Wednesday 09:45, China's Caixin Services PMI for August.

Wednesday during the European session, final Services PMI for August in France/Germany/Eurozone, Services PMI for August in the UK, Eurozone Producer Price Index (PPI) Month-to-Month for July.

Wednesday 22:00, US July JOLTs job vacancies, US July factory order monthly rate

Thursday 17:00, Eurozone July retail sales monthly rate

Thursday 19:30, US August Challenger business layoffs

Thursday 20:15, US August ADP employment numbers

Thursday 20:30, US Initial jobless claims numbers as of August 31

Thursday 22:00, US August ISM non-manufacturing PMI

Friday 17:00, Eurozone Q2 GDP final annual rate, Eurozone Q2 seasonally adjusted employment numbers quarterly rate

Friday 20:30, Canadian August employment numbers, US August unemployment rate, US August seasonally adjusted non-farm employment population, US August average hourly wage annual rate/monthly rate

On the eve of the Federal Reserve meeting on September 18, the bets will depend on changes in economic data (recent economic data has been fluctuating).

The July non-farm payroll data triggered the plunge in early August. The non-farm payroll employment data for August will be released next Friday. According to a survey of economists compiled by Bloomberg, the expected new job additions are estimated to be between 0.1 million and 0.208 million, with a median of 0.163 million. The unemployment rate is expected to gradually decline to 4.2%.

Next week, the U.S. ISM Manufacturing/Non-Manufacturing PMI, durable goods orders, initial jobless claims, and other data will be released. At a time when economic growth has become the market's sole focus, these data could all influence market sentiment. Powell previously stated at the Federal Reserve's Jackson Hole annual meeting in Wyoming that the "direction of future policy is clear", but that the "timing and pace of rate cuts will depend on new data, evolving prospects, and balancing of risks".

Analysts point out that the employment data next week is expected to cause volatility during the shortened trading week. North American markets will be closed on Monday due to the Labor Day long weekend. Some analysts have stated that despite the gold price breaking $2500, the market is neither in a bubble nor extremely overbought. However, the weakness in the U.S. dollar seems somewhat excessive, posing risks to precious metals. The U.S. dollar has been oversold recently, with the latest CFTC data as of August 27 showing hedge funds, asset management companies, and other participants in the futures market overall preparing for a dollar decline. Traders have placed bets of around $9.8 billion, expecting further dollar depreciation, the highest since January.

Given this, the upcoming ISM data or non-farm payroll report may not need significant upside surprises to trigger further short covering in the U.S. dollar and gold pullback. Goldman Sachs also warns that although there are tactical positioning changes, structural fund flows and the high attractiveness of U.S. assets may limit the dollar's decline. However, any weakness in gold prices could be seen as a buying opportunity. U.S. CFTC data shows that in the week ending August 27, speculators' net long positions in COMEX gold rose to a four-year high.

It is worth noting that since 2017, gold prices have fallen in September every year, with an average decline of 3.2% in September, making it the worst month of the year. This phenomenon is not limited to gold: September is also typically the worst performing month for the U.S. stock market, with the average decline in the S&P 500 index over the past 10 years exceeding 1.5%. September is also traditionally the strongest month for the U.S. dollar.

Ole Hansen, Head of Commodity Strategy at Saxo Bank, said, "Seasonal factors suggest that the next month may be challenging."

Meanwhile, hedge funds have switched to a bullish view on the euro for the first time since early June, as speculation in the market suggests that the European Central Bank's rate cut may be smaller than the Federal Reserve's. Data this week showed that inflation rates in the Eurozone and France fell to their lowest levels in three years at 2.2%. Previously, inflation in Germany and Spain was also easing, reinforcing the rationale for a European Central Bank rate cut. Investors are betting on the ECB cutting rates two to three times this year, less than the four times expected from the Federal Reserve. Investors will observe whether next week's Eurozone manufacturing and services PMI data will overturn this expectation.

Company financial report:

As the earnings season comes to an end, next week will focus on the financial reports of NIO Inc (NIO.N), Broadcom (AVGO.O), C3.ai (AI.N), and others.

Despite the weakness in the U.S. labor market, traders believe that the world's largest economy will avoid a consumer-led economic downturn, and are therefore buying various assets from small cap stocks to speculative debt. EPFR Global data compiled by Bank of America shows that funds focused on U.S. stocks increased by $5.8 billion, experiencing the ninth consecutive week of inflows, while high-yield funds attracted $1.7 billion.

At least for now, economic data and corporate profits do not show any danger. However, if there is a lesson from the debacle in early August, it is that a consensus bet – going long on artificial intelligence and taking advantage of the softening yen – may suddenly backfire.

Market holiday arrangement:

On Monday, September 2nd, the New York Stock Exchange was closed for Labor Day; CME Group's precious metals and U.S. crude oil futures contracts closed early at 02:30 Beijing time on the 3rd, and equity index futures contracts closed early at 01:00 Beijing time on the 3rd; Intercontinental Exchange's Brent crude oil futures contracts closed early at 01:30 Beijing time on the 3rd.