Weekly economic & financial commentary
|Summary
United States: "Transitory" Feels Increasingly Long
- Chair Powell reiterated his view that current inflation pressures would prove temporary in testimony to Congress, but there were few signs of inflation cooling this week. Both consumer and producer price inflation came in notably higher than expectations for June, while plans among small businesses to raise prices rose to a 41-year high.
- Retail sales rose 0.6% in June, which was stronger than expected and an indication that stronger spending on services as the economy reopens need not come at the expense of goods.
- Next week: Housing Starts (Tuesday), Existing Home Sales (Thursday), Leading Index (Thursday)
International: China Resilient; Monetary Policy Divergences Building
- China reported Q2-2021 GDP data and June activity indicators this week. Our takeaway is that China's economy, while slowing, is still resilient. In addition, the Reserve Bank of New Zealand announced an end to its asset purchase program, while the Bank of Canada slowed asset purchases and the Bank of England turned more hawkish, all while the Fed remained relatively dovish.
- Next week: European Central Bank (Thursday), South African Reserve Bank (Thursday), U.K. Retail Sales (Friday)
Interest Rate Watch: A Rise to Nine and Hold the Line
- The Fed's balance sheet recently crossed over $8 trillion; this week's Interest Rate Watch considers where it is going from here and what it means for financial markets.
Topic of the Week: Extreme Heat and Megadrought Threaten U.S. Agriculture
- The summer has brought severe heat, worsening drought conditions, wildfires and shrinking water supplies to the West, which is disproportionately affecting the region's agriculture industry.
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