It’s the week before Labor Day, which means trader participation and conviction will be limited as markets languish in the seasonal nadir.

Inflation data out of the US and Europe headline the macro docket. The Fed’s preferred measure, due on Friday, will likely show core price growth was 0.2% last month.

A consensus print on the MoM core PCE update would leave the policy narrative unchanged. Indeed, there’s virtually no prospect for this week’s data to rock any boats in that regard. Jerome Powell was unequivocal in Jackson Hole: The Fed will start cutting next month, it’s just a matter of how large the first cut is and how much easing the new dot plot tips for the balance of the year.

Barring a dramatic downward revision to the spending component of Q2 GDP in the second estimate, scheduled for Thursday, and/or some manner of wild undershoot on the July personal consumption print, the market will continue to operate on the assumption that September’s cut will be 25bps. The test for that assumption comes on September 6, with the August jobs report.

It’s worth noting that the 2010-2020 (i.e., post-GFC, pre-pandemic) average for MoM core PCE was 0.13%. So, we’re not actually back to “normal,” but the Fed would tell you that’s fine considering central banks spent a dozen years after Lehman trying to stave off unwanted disinflation.

As alluded to above, the BEA will release its second estimate of Q2 GDP. Old news, by definition, but market participants will still eye the release for any evidence of slower spending, and the same obviously goes for the following day’s personal consumption tally covering July, when spending probably rose 0.5%, according to economists. (Too strong for a 50bps rate cut, by the way.)

Updates on the main two US home price gauges due Tuesday will almost surely show more gains, while pending home sales figures due Thursday will be eyed for evidence of an inflection in contract signings, although the data won’t capture early August, when rates took a header.

A fresh read on Conference Board confidence likely won’t move any needles, nor the final read on University of Michigan sentiment for August which, like the PCE readings, will hit into day one of a de facto four-day weekend on August 30.

Across the pond, Europe will release inflation data for August. That’ll be worth a mention. The ECB’s pondering the second rate cut of the cycle (at the September meeting) and the headline gauge is likely to print somewhere very near target.

Core prices probably ran 2.8% YoY this month across the region, economists reckon.

Note that the euro’s coming off its best week against the dollar of 2024. The common currency rallied 0.7% on August 23 alone as Powell’s dovish inflection undercut the dollar.

“[A]s we look at the limited data offerings ahead, we anticipate that a range-trading theme will emerge as the process of enjoying the final days of summer overshadows the few releases of note,” BMO’s Ian Lyngen and Vail Hartman said, adding that “risk assets have continued to outperform expectations [and] investors will be on guard for any evidence that an FOMC in cutting mode might not be enough unto itself to justify lofty(?) valuations into month-end.”