The ECB Governing Council meets on 8 September and it faces a make-or-break bid to save its quantitative-easing strategy in the face of self-imposed limits on what it can buy. Analysts say the ECB might extend the horizon of its asset purchase program from March to September 2017.
The next Bank of England meeting is on September 15 — analysts, surveyed by Bloomberg, only see a 6.3 percent probability of a rate cut at that meeting — and attention will focus on the implementation challenges of the monetary authority's bond-purchase scheme after a challenging start for the program.
Similarly, fears are growing the Bank of Japan (BOJ) is exhausting its policy arsenal amid weak GDP, stubborn deflationary pressures, and a declining stock of government bonds available for purchase. The BOJ will announce the results of its comprehensive review of its monetary policy on September 21 — the same day as the Fed decision — amid rising expectations it will cut rates further into negative territory.
The G20 Summit will also take place on September 4-5, with China, the host, seeking to focus on global growth and financial-sector issues. There has been a rhetorical shift in recent months among advanced-economy policy makers in favor of looser fiscal policy, given the declining returns from monetary stimulus.
Although analysts don't foresee a coordinated plan at the G20 level for a large fiscal stimulus plan, markets will be keenly focused on the extent to which policy makers talk up the growth-boosting efficacy of fiscal policy, in general, a development that could reshape trading investments over financial assets, particularly high-grade bonds.
And while the Organization of Petroleum Exporting Countries (OPEC) could be renamed the Organization Who Cried Production Freeze, analysts at Barclays Plc see cause to believe the threat to maintain output at current levels is more credible this time around, with officials from OPEC member countries scheduled to meet in Algeria from September 26 - 28.
"Non-OPEC countries that many analysts thought could not produce more (Russia for example), as well as some OPEC countries have continued to raise their production," writes Kevin Norrish, managing director of commodities research. "So a freeze this time could help stem some potential further supply growth."
September is also the start of the school year in global primary capital markets and analysts expect a busy pace of U.S. investment-grade issuance despite unusually strong supply in August. Analysts at Bank of America, for example, expect $120 billion in new high-grade bonds. The ease in which credit markets absorb the supply will serve as an indicator of M&A and share buy-back volumes in the second half of year given the bond market's outsize role in such corporate financing activities, say analysts.
In sum: vacation's over. Report back to your terminal immediately.
This article was provided by Bloomberg News.