Banks cash with the ECB’s program; Inflation in the Eurozone surges; Record domestic price growth in the United States

Good day. Eurozone banks are taking advantage of a European Central Bank program that pays them to lend to ensure that credit flows into the European economy to support its recovery. The program shows how willing the ECB has been to keep eurozone economies afloat during the pandemic by releasing liquidity to businesses to avoid a credit crunch. Broad consumer prices in Europe rose 3% in August from the previous year, a recovery from the 2.2% inflation rate recorded in July and the largest increase since November 2011 Meanwhile, US home price growth hit a record high in June. , as strong demand continued to outpace the number of homes on the market.

Now on to today’s news and analysis.

Top news

European banks get financial boost thanks to ECB credit movements

The European Central Bank wants to ensure that credit flows into the European economy to support its recovery as the pandemic continues and the banks cash in.

Eurozone banks make money through an ECB program that basically pays them for lending, increasing their income and helping to offset some of the costs associated with the continent’s long-standing negative interest rates.

Eurozone inflation hits decade high as bottlenecks ease

Inflation in the eurozone hit its highest level in nearly a decade in August, as shortages of semiconductors and other important manufacturing components drive up prices paid by consumers.

RBA Has Strong Case For Suspending Typing As Lockdowns Cloud Outlook

By James Glynn

Australia’s economy grew faster than expected in the second quarter, easing recession fears and paving the way for what is expected to be a fairly vigorous debate around the Reserve Bank of Australia’s board table on Tuesday on whether it should start withdrawing some monetary stimulus. Read more.

American economy

U.S. domestic price growth hit record high in June

The S&P CoreLogic Case-Shiller National Home Price Index rose 18.6% in the year ended June, up from 16.8% the month before. June marked the highest annual price growth rate since the index began in 1987.

Social security costs expected to exceed total income this year

Social Security trust fund administrators in an annual report released Tuesday said the program is expected to pay benefits that exceed its earnings in 2021, as it planned last year at the start of the pandemic.

Hurricane Ida could cause more than $ 15 billion in insured losses

Wells Fargo and Fitch Ratings both estimate the damage could total between $ 15 billion and $ 20 billion. By comparison, Hurricane Katrina, which hit Louisiana 16 years to the day before Ida, caused a record $ 65 billion in insured losses, Fitch says.

Key developments around the world

Bank of Mexico raises economic growth forecast for 2021

Citing an expectation that the recovery would continue into the second half of the year, the Bank of Mexico said it forecasts a 6.2% increase in gross domestic product this year from 2020, up from its previous estimate of 6%.

India’s economy is recovering but battered by waves of Covid-19

India’s gross domestic product rose 20.1% in the three months ended June amid one of the world’s worst outbreaks of the Covid-19 pandemic, compared to a year earlier when it had declined by about 24%, the largest drop on record.

Overview of financial regulation

The Treasury seeks public opinion on data from insurance companies on climate risks

A Treasury office is seeking public input on how climate change might affect private insurers, including the data needed to develop standardized disclosures of climate-related financial risks for the insurance industry.

Obama White House veteran chosen for New York financial regulator

New York Governor Kathy Hochul has appointed Obama administration veteran Adrienne Harris as head of the New York State Department of Financial Services, which oversees insurance companies and chartered banks. ‘State.

Forward-looking indications

Wednesday (every hour ET)

9:30 p.m .: Bank of Japan’s Wakatabe speaks at a meeting with local leaders in Hiroshima

Thursday

8:30 am: US Department of Commerce releases July international trade data

Research

Bank of America rejects Fed rate hike strategies

When the time comes for the Federal Reserve to start raising interest rates, the way it raises them is unlikely to resemble past tightening campaigns given the central bank’s shift to a targeting system. average inflation, Bank of America analysts wrote in a research note on Tuesday. Future rate hike campaigns could be more choppy, as “stop-go or stop-pause-cut scenarios are more likely than in the past – assuming inflation does what it did in the past 25 years. recent years, “the analysts wrote. They added that the current Fed regime “leads to high probability outcomes in which the Fed stays on hold for long periods of time, or even cuts rates sometimes without the threat of a recession. What if inflation falls below 2% by the start of 2023, we could have a very long wait before the Fed hikes. ”

– Michael S. Derby

Remark

July jitters in China turn summer slump

It’s been a tough summer for the world’s second-largest economy, a fact fully confirmed by official Chinese purchasing managers’ indexes in August, and the big question now is how Beijing will react, writes Nathaniel Taplin.

Base points

U.S. consumer confidence fell sharply in August as the spread of the Covid-19 Delta variant and concerns about inflation deteriorated household mood, pushing the Conference Board’s consumer confidence index to 113, 8 against 125.1 revised downward in July. Economists polled by the Wall Street Journal expected the indicator to drop to 123.1. (Dow Jones Newswires)

The Chicago business barometer of MNI indicators fell from 73.4 in July to 66.8 in August, a two-month low and below the expectations of economists polled by the Wall Street Journal who expected it to be would establish at 69.4. Readings above 50 indicate an expansion in activity, while readings below 50 indicate contraction. The indicator signals growth since July 2020. (DJN)

Canada’s gross domestic product contracted at an annualized rate of 1.1% in the second quarter to reach Can $ 2,071 trillion, the equivalent of $ 1,643 billion, according to Statistics Canada. Market expectations were for an annualized increase of 2.5% in the quarter, according to economists at TD Bank. (DJN)

The French economy grew more than initially estimated in the second quarter after stagnating in the first three months of the year, with gross domestic product increasing by 1.1% from April to June compared to the previous quarter, according to a second estimate published by the statistical office Insee. The gain was greater than the previously estimated 0.9% expansion. (DJN)

The 10-year German Bund yield topped -0.40% for the first time in about a month on Tuesday, according to data from Tradeweb, propelled higher by rising eurozone inflation and the outlook that The European Central Bank is cautiously reducing the pace of the Pandemic Emergency Purchase Program in the fourth quarter. (DJN)

 

(END) Dow Jones Newswires

September 01, 2021 08:48 ET (12:48 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.

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About Robert Valdivia

Robert Valdivia

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