The Day at a Glance | Aug 25 2022

The Top

*The Economic Policy Symposium in Jackson Hole kicks off today; Jerome Powell will give an important speech for markets tomorrow. 

*China announces fiscal stimulus worth 1 trillion Yuan (146 billion dollars) in infrastructure investment.

*The US economy receded less than expected in the 2Q22: -0.6% annualized vs -0.9% prev.

*A 0.9% rate of growth was confirmed in Mexico´s economy for the 2Q22 (2% annual); June´s growth set below estimates (1.6% annual vs 2%e.).

*US economic activity decreased more than expected according to S&P Global PMI´s (Composite PMI 45 vs 49e.).

*We must take interest higher (above 4%) in order to contain demand and take inflation back to its target level: Esther George (Kansas City FED).

*Some members of the ECB argued in favor of more moderate increases due to risks of a recession, according to the central bank´s meeting minutes.

*Iraq, Bahrain, Kuwait and Venezuela back Saudi Arabia to reduce global crude oil production within OPEC+ framework.

*Biden announced a four-month extension of the moratorium on student loan repayments.

Economic environment

All eyes on the FED. The Economic Policy Symposium in Jackson Hole kicked off this Thursday, sponsored by the Kansas City FED. In an interview, President of the Kansas City FED, Esther George, assured that it´s still too soon to ensure how aggressive September´s interest rate increase will be, given that economic data must still be made known. However, she considers it essential to clarify communications regarding the future trend in rates, which must still be adjusted upwards due to high inflation. George acknowledged that it´s desirable that interest rates remain slightly above 4% towards 2023 to guarantee stability in prices. Chair of the FED, Jerome Powell, will participate in the event and will give a key speech tomorrow – one in which markets expect much greater clarity regarding future interest rates. Powell is expected to reiterate the central bank´s commitment to continue increasing rates, but some market players believe that he could give some signs of moderation in future interest rate increases. Raphael Bostic (Atlanta FED) assured that September´s decision is a “coin toss”, with an equal likelihood of seeing a 50 or 75bp increase.