Briefings

Archive July 2022

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Week InReview: July 29, 2022

Face time.
 
US President Joe Biden and Chinese President Xi Jinping told aides to plan an in-person meeting during a 2-hour call Thursday, which would be the first face-to-face between the men since Biden became president. During the conversation, the leaders warned one another about rising risks of a confrontation over Taiwan — Biden reiterated the US ‘One China’ policy, but warned Xi against military action to reunify the mainland and the island. Xi told Biden that China will “resolutely safeguard China’s national sovereignty and territorial integrity” and that “whoever plays with fire will get burnt.” Tensions over Taiwan have been exacerbated by US House Speaker Nancy Pelosi’s possible plans to visit the island. Pelosi is set to leave for an Asia-Pacific region trip Friday, but it’s still unclear whether it will include Taiwan.

Week InAdvance: July 25, 2022

Mon Jul 25 Sunak-Truss debate in London. | Tue Jul 26 EU energy ministers hold emergency meeting. | Wed Jul 27 FOMC rate decision and Powell news conference. | Thu Jul 28 US initial jobless claims, GDP. | Fri Jul 29 European inflation & GDP figures. Islamic New Year begins.
 
The Federal Reserve is expected to raise rates by 75 basis points on Wednesday for the second straight meeting. Policy makers solidified their resolve in June to keep hiking in order to prevent higher inflation from becoming entrenched.
 
On Thursday, the US reports the initial reading of second-quarter gross domestic product, which is tipped to eke out a small advance. First-quarter GDP fell for the first time since 2020, reflecting a jump in imports tied to solid consumer demand.
 
In Europe, inflation and GDP figures from across the bloc are due on Friday. Energy shortages remain the possible last straw for Europe’s economy, as uncertainty over Russian gas supplies continues.
 

Week InReview: July 22, 2022

Market jitters.
 
Outside the New York Stock Exchange. Photo: Jonathan Alpeyrie/Bloomberg
 
Economic risks continue to dog global markets, sending oil further below $100. Ground zero for much of the growth worry is Europe, where Russian gas is flowing again but at reduced capacity amid ongoing risks of a shut off that could damage the euro-area outlook. Meanwhile, a powerful rally in the Treasuries market Thursday also highlighted fears of a recession as monetary policy tightens. Disappointing earnings from Snap Inc. on slowing advertising have also dented some of the optimism from a stock rally this week that pared this year’s rout in global shares to 18%. At least one fund manager is looking to Asia for solace: US-based GQG Partners LLC has more than $7 billion invested in India, betting its best positioned among emerging nations to withstand a global recession.  

Week InAdvance: July 18, 2022

Mon Jul 18 WEF's 'The New Champion Dialogues'. | Tue Jul 19 SEC oversight hearing. PRI passive strategy webinar. Yellen visits South Korea. | Wed Jul 20 IOSCO investor webinar. UK postal workers set to strike for three days. | Thu Jul 21 National Day public holiday in Belgium. ECB rate decision. Nord Stream 1 pipeline reopens?
 
The European Central Bank is expected to raise rates for the first time in more than a decade on July 21. Markets are pricing a 25-basis-point move, which would keep the Eurozone at negative rates despite surging inflation. President Christine Lagarde will discuss the decision and a new tool to combat yield spreads between European nations. 
 
On Wednesday, the EU will unveil its contingency plan in case Russia doesn’t resume gas flows through Nord Stream 1, which is scheduled to come back online Thursday after annual maintenance. In the UK, 2,400 Royal Mail workers plan to strike for three days, starting on Wednesday, to protest job and pay cuts. 

Week InReview: July 15, 2022

The 'I' word.
 
The highest inflation in a generation continues to buffet both the world economy and financial markets. In the US, President Joe Biden is risking a disconnect with the American public after playing down a 9.1% annual inflation rate as out of date because it fails to reflect a recent drop in fuel prices. In markets, meanwhile, investors are fleeing to the dollar as a safe haven with worries that a global wave of interest-rate hikes to fight price pressures will choke economic growth. That’s taken a gauge of the greenback’s strength to a record high. The prevailing gloomy mood leaves stocks in Asia facing a choppy start on Friday.

Week InAdvance: July 11, 2022

Mon Jul 11 Libor forum at the NY Fed. IOSCO carbon markets roundtable. | Tue Jul 12 IOSCO sustainable finance roundtable. IFF Paris. | Wed Jul 13 Proxy rules on SEC's agenda. US CPI data. Bastille Day. | Thu Jul 14 G20/OECD Corporate Governance Forum. | Fri Jul 15 G20 finmins in Bali. Basel Committee meets. | Sun Jul 17 Annual Meeting of the Champions in Geneva.
 
The latest US inflation reading is out Wednesday, with the consumer price index projected to show an 8.8% annual gain in June following an 8.6% rate in May. China’s second-quarter GDP on July 15 is estimated to rise just 1% from a year ago as its Covid Zero policy hits growth.
 
The oil market is on edge as US President Joe Biden heads to the Middle East, where he’s expected to plead Gulf crude producers to pump more barrels. Biden will visit Israel on the way to Saudi Arabia, where he’ll seek to mend ties with Crown Prince Mohammed Bin Salman after criticizing the kingdom’s human-rights record.
 
The Nord Stream 1 pipeline – Europe’s key channel for natural gas from Russia – is scheduled to shut Monday for maintenance, tightening a market that’s seen prices soar in recent weeks and amid growing fears that Moscow may not reopen it.
 

Week InReview: July 8, 2022

Fed minutes.
 
The Fed released the minutes from their most recent interest-rate setting meeting, and they again underscored their commitment to getting inflation down. Many on the Federal Open Market Committee saw the risk of entrenched inflation, and signaled that a 50 or a 75 basis-point hike at the July FOMC was most likely. The Fed also made clear it’s ready to prioritize inflation over growth. On the latter front, tomorrow sees the release of non-farm payrolls in the US. Jobs data still remain upbeat, with layoffs steady in May, while unemployment claims remain historically very low.

Week InAdvance: July 4, 2022

Mon Jul 4 US celebrates Fourth of July. The Boston Pops show returns. | Tue Jul 5 Joint WTO-ITC event. | Wed Jul 6 FOMC minutes. Running of the Bulls in Pamplona. | Thu Jul 7 G20 foreign ministers in Bali. | Fri Jul 8 'French Davos' in Aix-en-Provence. | Sat Jul 9 Eid al-Adha, one of the most important festivals in the Muslim calendar, begins.
 
The Group of 20 foreign ministers’ meeting is held in Bali against a backdrop of geopolitical and economic challenges, many triggered by Russia’s war in Ukraine. Israel, Australia and Poland are among countries setting monetary policy, while Mexico, Russia and South Korea are among those posting inflation data. 
 
Between scrapped flights and labor walkouts, Europe is looking at another messy week for mass transportation. Leading names in technology, media and investing converge on Sun Valley, Idaho, for Allen & Co.’s annual conference. 
 
Monday is a US market holiday as America celebrates Independence Day, with festivities including the return of the Boston Pops Fireworks Spectacular to the city.

Week InReview: July 1, 2022

Recession rumblngs.
 
Federal Reserve Chair Jerome Powell says there's a risk the Fed could go too far on rate hikes but it's not a top risk to the economy. Photo: Bloomberg
 
Recession fears continue to ratchet higher even as Fed Governor Jay Powell hopes the US can avoid one. Powell, speaking at the ECB's annual policy forum in Sintra, Portugal, said: "We hope that growth will remain positive," even as the Fed hikes rates to curb the highest inflation in 40 years. Inflation is continuing to reverberate through the market, with high-end furniture retailer RH slumping in extended trading after slashing its forecast for the second time in less than a month, blaming soaring mortgage rates and shrinking sales of luxury homes. Meanwhile, China’s economy showed further signs of improvement in June.

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