Economic events of the coming week

Join Anyoption and take advantage of the volatility of the markets ..Start Trading TODAY!

Monday: The Final estimate of May’s Industrial Production data will be released in Japan, with the last print indicating a moderate 0.8% annual increase. Data will also be provided on the Eurozone’s Industrial Production, which analysts expect will see a 1.2% monthly decrease. Tuesday: Consumer Price Index data will be released in Italy and the U.K. In Germany, the ZEW Survey will see light, with analysts expecting some moderation in both the Current Situation component, as well as ‘Expectations’. In the U.S., the Empire State Manufacturing Survey will be released, as well as June’s Advance Retail Sales. Additionally, Fed Governor Yellen will give a Semi-Annual Testimony to Senate. Wednesday: China will release data on its rapidly growing Retail Sales, as well as less so Industrial Production and Gross Domestic Product. The U.K. will see the release of some labor market statistics, among these are Jobless Claims and the International Labor Organization’s Unemployment rate. In the U.S. the weekly MBA Mortgage Applications will see light, as well as the Producer Price Index and June’s Industrial Production. Thursday: The Final estimate of June’s Consumer Price Index for the Eurozone will be released. In the U.S., the weekly Housing Starts print will see light, recently being a hair over one million monthly. Also due is the weekly Initial Jobless Claims, still above but close to 300K. Friday: The University of Michigan’s Consumer Confidence Index and the Conference Board’s Leading Index will be released. Join Anyoption and take advantage of the volatility of the markets ..Start Trading TODAY!

Portugal raises global concerns

Join Anyoption and take advantage of the volatility of the markets ..Start Trading TODAY!

Equity markets took a slight beating last week as Portugal's second largest bank, Banco Espirito Santo, reported that it held 1.18 billion Euros in loans, securities and other items of its parent company Espirito Santo International. The update was provided after Santo International failed a payment on one of its commercial paper. In spite of the Portuguese central bank attempting to attempted to reassure markets that Santo International's solvency is "solid", the following day saw Banco Espirito Santo downgraded by both Moody's, as well as Standard & Poor's rating services. Moody's did say that the downgrade should not affect the Portuguese government bond's rating, recently revised to Ba2. At this point, however, concerns of a run on the banks in Portugal induced a pessimistic sentiment in equity markets. The Spanish IBEX 35 Index lost 1.94% between Thursday and Friday. The German DAX lost 1.45% between the two days, and the French CAC40 lost nearly 1%. U.S. equity markets were less affected, however, they did gain some fuel from the aforementioned dovish minutes. Join Anyoption and take advantage of the volatility of the markets ..Start Trading TODAY!

Fed sees QE ending in October

Join Anyoption and take advantage of the volatility of the markets ..Start Trading TODAY!

According to June's meeting minutes, released last week, the Fed is expected to end the third round of the quantitative easing in October, should the economy evolve as the Federal Open Market Committee members anticipate. Following a prolonged period in which the Fed has purchased 85 billion Dollars’ worth of assets every month, the Fed's expectation for the end of easing is an historical landmark in U.S. monetary history. With this forward guidance clearly paved, the minutes addressed FOMC members' view of the U.S. and global economy, and the way that translates to future policy.

Among the factors the Fed members' had in mind, it was noted that consumer spending had been supported by household net worth rather than income gains. One plausible explanation would argue that this increase in household net worth is backed by the aforementioned easing, leading to inflating asset prices. On the other side of the equation, the fact that income gains were held back might be the result of this monetary easing not trickling down to the real economy, leading to an increase at the labor markets' demand side. Regarding this, Fed members express a view by which a pickup in income would be the one to support a sustained income in consumer spending. Undoubtedly, welfare effects do not last forever.

Committee members' view of the economy as recovering in some aspects, yet still problematic in others naturally translated to ambiguity regarding the way those members see the federal funds rate, in the future. Among these issues, most participants were said to expect the federal funds rate to remain below their long term objectives at the end of 2016. Half of these participants associated the low level of the federal funds rate with insufficient inflation. Other participants expressed concern of a combination consisting, inter alia, of "lower equilibrium real interest rate, continuing headwinds from the financial crisis and subsequent recession". As Yellen said once, monetary policy is not a panacea. Recently, it also needs to cope with growing resilience by the problems it wishes to solve, as well growing side effect. 

Join Anyoption and take advantage of the volatility of the markets ..Start Trading TODAY!