This week's market focus: risk averse sentiment, economic data, and Powell's speech

Markets are entering the new week with the major risk-off clouds still hanging over our heads, namely with the continued structural challenges in the Chinese economy and the higher-for-longer perception for interest rates going forward. The US data calendar will be mostly 2nd-tier, with S&P manufacturing PMI, durable goods, and new home sales on the docket. Further interest rate cuts in the 1y and 5yr LPR are expected out of China, albeit with likely little effect on the eroding sentiment. The main focus of the week will be on Jackson Hole on Friday, where Chairman Powell will be speaking against a rapidly deteriorating risk backdrop since the July FOMC, but with a US dataset that’s performed much better than expected. The topic of the JH speech will be “Structural Shifts in the Economy”, and markets will be watching for any mention of changes in the economy’s neutral rate and level of terminal rates going forward.