Europe is primed for a positive open on Monday, as investors look ahead to this week’s key Jackson Hole meeting. In Asia, stocks were broadly higher, with Treasury yields, oil and gold also posting gains. In currencies, the dollar and the yen dipped.

Equities:

European equities should extend their rally on Monday, tracking gains in Asia and following Wall Street’s positive finish.

Investors will be watching for more details on the Federal Reserve’s plan to cut its bond-buying at the virtual Jackson Hole meeting later this week. The Economic Policy Symposium starts Thursday and Jerome Powell gives his keynote address on Friday.

Fed officials appear on track to begin reversing their easy-money policies later this year, though there are several wild cards that could alter the timing of their plans. Those include higher-than-expected inflation and rapidly rising Covid-19 cases associated with the spread of the Delta variant.

Deutsche Bank said monetary policy discussions and the evolution of the Delta variant are likely to drive markets this week, while U.S. PMI data could help understand the pandemic’s impact on the nation’s economy. “There isn’t much in the way of earnings, though there’ll be continued attention on U.S. politics as the Democrats in Congress seek to pass their economic agenda.”

Meantime, Bank of America said concerns over the Delta variant have had a varied impact on flows to risk asset funds. While “rising uncertainty on the back of Delta has weighted on risk sentiment…credit has remained strong over the past weeks and months.”

By contrast, even if investors have continued to pour money into equity funds, the pace has slowed. “Inflows into credit funds have continued to be robust,” and equity fund flows, though still broadly on the positive side, have lost pace over the past couple of months, BOA said.

Forex:

The dollar and the yen weakened slightly against most G-10 currencies as risk-on sentiment was spurred by gains in Asian regional equity markets and last Friday’s comments from the Fed’s Rob Kaplan. Those remarks indicated a less- hawkish tone compared with his stance at the start of the month, said IG. This could offer some reassurance for market players on accommodative monetary support to remain for longer if Covid-19’s Delta variant persists and hurts economic progress.

Goldman Sachs said that “relatively hawkish Fed pricing has played a role” in supporting the dollar, but “a bigger factor has been the downgrade in global growth expectations.” It added that both drivers “likely need to turn for the broad dollar to move lower on a sustained basis.”

Bonds:

U.S. government bond yields extended their rally in Asia after they made their largest one-day gain in over a week on Friday, following signals that the Fed is on track to begin reversing easy-money policies later this year. However, yields still closed the week down the most in three weeks as the hawkish tone struck by the Fed minutes prompted some analysts to change their tapering forecast to a late-2021 start.

Some investors are betting the Fed’s coming Jackson Hole conclave won’t spark big moves in the market.

“The economic data that is really coming out here is really suggesting that the Fed has plenty of time on its hands to really wait and watch, and I would expect that this will be a very boring but risk asset friendly message,” said David Wagner, portfolio manager at Aptus Capital Advisors.