The inability of central banks to live up to the high expectations of markets is an issue that has been around for a while now but become increasingly clear as of late. With interest rates at record lows around the globe, the ability of central banks to cut in any meaningful way has been dramatically reduced and investors just aren’t blown away by quantitative easing any more.
European equity markets are expected to open a little lower on Tuesday following yet another mixed session in Asia overnight, as the Reserve Bank of Australia became the latest central bank to ease monetary policy at its meeting this month.
We have another big week in store in the markets, with particular focus falling on Thursday’s Bank of England monetary policy decision and Friday’s U.S. jobs report. The BoE opted last month to go against expectations and hold off on easing monetary policy following the Brexit vote in June as it wanted to gather more data before deciding on the best course of action.
U.S. home resales hit their highest level in nearly 9-1/2 years in June as low interest rates lured first-time buyers into the market and the number of Americans filing for unemployment benefits fell last week, underscoring the economy's strength.
U.S. job growth surged in June as manufacturing employment increased, more evidence the economy has regained speed after a first-quarter lull, but tepid wage growth could see the Federal Reserve remaining cautious about hiking interest rates.