Market dynamics

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Will the Fed provide any clues about slowing down the bond purchase schedule?

Fed officials will hold their first policy meetings on Tuesday and Wednesday, as this opens the door to an earlier and more aggressive monetary policy than generally expected.

The U.S. Central Bank last month used its “Dot plot“Personal interest rate forecast, which indicates that there may be two interest rate hikes in 2023, and it was zero only three months ago.

Chairman Jay Powell tried to discourage market participants from interpreting these forecasts too much, and emphasized that they do not represent official views.But a slightly less dovish tendency suggests that the Fed may react faster Higher inflation Better than previously thought.

Powell may also have an in-depth discussion on the final reduction of the Fed’s $120 billion monthly asset purchase plan at a press conference held after the meeting on Wednesday.These conversations started last month, and in the following weeks inflation and Salary data Far higher than economists expected.

The central bank has stated that it will continue to implement the asset purchase program until it sees “substantial progress” in inflation and employment targets. In a congressional hearing earlier this month, Powell stated that the threshold is still “Some distance“, highlighted comment surging A variant of the Delta coronavirus that threatens growth in the United States and globally.

“The spread of Delta variants and the market’s concerns about the outlook… strengthened the argument against preemptive easing of easing,” Goldman Sachs chief economist Jan Hatzius wrote in a recent report.

As the unemployment rate will fall further in the next few months, Hatzius predicts that the Fed may give hints to reduce the scale in August or September. Colby Smith

How fast is inflation in Europe rising?

Inflation levels in Europe are expected to continue to rise in July, which has increased the pressure on the European Central Bank, which considers this growth to be temporary, and the euro zone is recovering from the economic impact of the pandemic.

Economists surveyed by Reuters predict that the initial consumer price inflation announced on Friday is expected to rise from 1.9% last month to 2% year-on-year in July.Since then, overall consumer price inflation has been rising January.

After the data provider IHS Markit, expectations for sustained growth are supported Say Friday, the growing demand and Supply restrictions As a result, the average selling price of goods and services in the Eurozone “increased at a rate close to survey records in July”, indicating that inflationary pressures are increasing, especially in manufacturing.

Next week’s data also includes a series of higher-than-expected inflation data for June. UK and US, Which shows that the rapid increase in prices has now become a global problem.

Holger Schmieding, an economist at the investment bank Berenberg, said that the recent surge in consumer prices on both sides of the Atlantic indicates that sellers and distributors are trying to pass on rising costs to consumers, adding that “inflation data may have further upside surprises. “.

However, although economic growth may be higher than the newly launched target of the European Central Bank Symmetrical Its president, Christine Lagarde, said last week that the bank will achieve an annual interest rate of 2% in the next few months, and that the bank will raise interest rates temporarily to achieve a 2% interest rate at least before 2023. “Persistent” price increases. Valentina Rome

Is China’s economic recovery losing momentum?

As China’s economy recovers from the effects of the coronavirus and shows signs of weakening, China’s July Manufacturing Purchasing Managers Index, which will be announced on July 31, will pay close attention to signs of slowing growth.

Economists surveyed by Bloomberg expect this month’s reading to be 50.8, compared with 50.9 in June, the lowest level since February. Metrics above 50 indicate expansion.

The market pays close attention to any signs that China’s economic recovery has lost momentum.After the destruction of the country’s southern ports, investors began to worry Coronavirus Outbreak Last month, higher costs raw material and Power shortage Manufacturing activity has been suppressed in recent months.

The country’s growth over the past year has been strongly supported by a strong industrial sector and booming exports supported by strong global demand.Its gross domestic product growing up As of the end of June this year, the three-month increase was 1.3%, which was in line with expectations.

Citi analysts described the weak results of the manufacturing industry in July, with a forecast reading of 50.6, which is in line with the results in February. They pointed out that the operating rate of blast furnace steel plants dropped sharply around the 100th anniversary celebration of the founding of the Communist Party in early July and was “still significantly lower”. Thomas Hale