LONDON, Sept 4 (Reuters) - Following are five big themes likely to dominate the thinking of investors and traders in the coming week, and the Reuters stories related to them.
The coming week will show how far the relative calm in global stock markets of recent days was due to a holiday in China. It’s back to work on Monday, and worries over China’s economy remain at the front of investors’ minds. Chinese trade and inflation data will be closely watched. It could well be a volatile start to the week as Labor Day in the United States will delay any Wall Street reaction to market moves in Shanghai. The bigger question, of course, is whether the recent falls in stocks herald a wider crisis and, if so, what remedial actions are left for central banks to take.
* Forex reserve unwind could reverse bond supercycle
* Investor flight from U.S. stocks fails to lift bond market
* China economic data likely to remain downcast
It took markets a while to digest the latest U.S. jobs data, which showed fewer jobs than expected were created in August. In the end, though, revisions to previous figures and a fall in the unemployment rate to a 7-1/2-year low persuaded investors that the sub-par August number did not necessarily reflect the economy’s underlying strength, and that a rise in U.S. interest rates as soon as Sept. 17 could still be on the cards. In the euro zone, European Central Bank chief Mario Draghi has made clear the bank is ready to take further action after it lowered its growth and inflation forecasts and ominously warned that growth would suffer from a reduction in momentum in China and emerging markets.
* U.S. labour market shows some muscle despite slower job growth
* ECB flags beefed-up QE as growth, inflation outlook fades
* G20 vows transparency on rate moves as global growth disappoints
Investors braced for a wave of economic data from China in the week ahead will also be desperately trying to weigh up what it all means for the price of oil and inflation around the world. Crude has endured one of its most volatile periods in six years and fuelled wild swings in euro zone bond yields and market-based measures of future consumer price growth. These moves have proved particularly unsettling for central banks around the world, so much so that the ECB for the first time explicitly stated it might extend its bond-buying programme beyond 2016. With a trio of the ECB’s top policymakers out and about next week, expect to hear a lot more on this.
* Volatile oil casts doubt on ECB’s future inflation gauge
* Majority of U.S. shale firms pass up Q2 chance to hedge $60 crude
The dust is settling on yet another bruising market sell-off - but not yet the systemic breakdown that everyone from Carl Icahn to Bill Gross has warned about. When will the ‘big kahuna’ hit? Investors are still very sensitive to liquidity issues in bond markets especially but, for now at least, markets are doing their job. After a rough post-payrolls Friday, markets will be on alert next week for any sign of further dislocation after an extremely volatile fortnight.
* Market sell-off yet to reach breaking point
* Traders in lock-step keep up pressure after sell-off
A week before the Fed decision, the Bank of England meets to consider a first rate rise from crisis-era lows. There is no expectation that the BoE will raise rates on Thursday, especially with the Fed still to decide. However, any change in the number of policymakers voting for a hike would unsettle markets. In August, the voting was 8-1 against. Although Governor Mark Carney has said the BoE can “look through” the temporary disinflationary impact of lower Chinese demand for commodities, soft UK data has prompted markets to move back their expected timing of a rate hike to April or May.
* Bank of England stance on rates unchanged by China - Carney
* Sterling hits 3-month low on doubts over BoE rate hike timing
* Canada rate decision Sept. 9, New Zealand Sept. 10, South Korea, Russia Sept. 11
Compiled by Nigel Stephenson; Editing by Kevin Liffey