The Day at a Glance | September 12 2023

*Markets show mixed signs regarding a new interest rate increase prior to the ECB´s monetary policy decision. 

*Russia and North Korea leaders meet; US warns of sale of weaponry. 

*OPEC maintains estimates that forecast robust growth in demand for oil in light of resilience shown by large economies. 

*Japan increases security links to Taiwan in a measure that likely ruffles China. 

Economic environment

Expectations are divided regarding the ECB’s monetary policy decision. Investors are split on whether the European Central Bank will raise interest rates this Thursday, as the money market slowly increases bets in favor of a new 25 base point hike. Investor confidence in Germany unexpectedly rose in September, according to the ZEW expectations survey. September´s survey showed mixed signals in Germany, with some optimism in the country’s future expectations component but also indicating continued weakness in the Eurozone as a whole, which backs expectations of a recession. Furthermore, ECB President Christine Lagarde believes that Eurozone workers need smaller wage increases to bring inflation down from the current 4.3% to its 2% target. In June, Lagarde noted that wage increases are a key reason to keep inflation forecasts high. However, within the ECB, there´s debate on why wage increases may not be a major concern. Firstly, wages are only just reaching their real levels after years of increases below inflation, and secondly, wage data is somewhat lagging, so more recent indicators show less bargaining power for workers and slower wage growth