` – The main Market Movers next week are the second estimate of the Eurozone GDP in the second quarter which arrives on Tuesday 17 August and, the day after, the publication of the minutes of the Fed meeting on 28 July, in which the US central bank he explained that despite the progress of the economy and the star and stripes labor market, for now all the policies supporting the recovery will remain intact. The European and US markets ended the week up, thanks to the optimism for corporate results and confidence in the long-awaited economic recovery, despite the concerns about the Delta variant of Covid remain in the background, with the sudden increase in coronavirus cases. on a global level that had not been taken into account in the height of summer.


The GDP of the Eurozone grew more than expected in the second quarter of the year. According to Eurostat’s preliminary estimate, gross domestic product rose by 2% after -0.3% in the previous three months. Better than analysts’ forecasts, who expected + 1.5%. If the figure is confirmed, it will indicate that we are on the right path to leave behind the crisis triggered a year and a half ago by the pandemic. In short, the recovery is taking place despite the uncertainties linked to the progressive spread of the most contagious variants of Covid, which have curbed the initial euphoria given by the fast pace of vaccination campaigns.

On an annual basis, the GDP estimate is + 13.7%, compared to the -1.3% indicated in the previous quarter and against the + 13.2% of the consensus. For the entire European Union (Eu-27) an increase in GDP of 1.9% on the quarter (-0.1% the previous year) and of 13.2% on the year (-1.3% on previous data). Expected then Wednesday for the final July inflation. According to preliminary data published by Eurostat, for last month the expected inflation in the euro area is 2.2%, an increase compared to the June values ​​(1.9%); a value therefore beyond the threshold considered optimal by the ECB.


Tapering or not tapering, that’s the question. While it is true that the Federal Reserve in the last meeting confirmed an accommodative monetary policy and reiterated “the commitment to use the full range of instruments to support the US economy in this difficult time”, it is now clear that the FOMC (the operating arm of the Fed) is split between ‘hawks’ and ‘doves’ and pressure is growing to start tapering within the year. According to the institution’s number one, Jerome Powell, the timing of the withdrawal of part of the $ 120 billion a month purchase program put in place by the US institution “will depend on the figures for the next few months”. Powell stressed that there is no timetable already set for the announcement, which could arrive as early as September, well after the Jackson Hole symposium in late August, which according to market rumors could have represented the scenario for the start of normalization.

The Fed’s eyes are on two fronts: the labor market and inflation, which, however, point in different directions. Several board members argue that purchases should be curtailed quickly to put monetary policy back on more usual lines and prepare for a possible rise in interest rates as a shield against inflation. Thus, for Mary Daly, president of the San Francisco Fed, the Federal Reserve could begin reducing asset purchases “as early as the end of the year”.

“I remain very optimistic about the recovery in the autumn and the improvements underway are the key variables that we monitor at the Fed,” Daly said a few days ago in an interview with the Financial Times. And according to Dallas Fed President Robert Kaplan, the right time to start tapering could even be October. “I would be in favor of announcing a plan at the September meeting and at the start of tapering in October,” he told CNBC last week.

For other FOMC colleagues such as Richmond Fed Chairman Thomas Barkin, on the other hand, the priority remains the labor market and it will take months for employment to recover enough to allow for the tightening of current monetary policies. Last Monday in an interview with Reuters Barkin highlighted the progress made by the United States in terms of the labor market, which goes towards the threshold that the Fed has indicated as necessary before starting to gradually reduce monthly purchases. and then finish the program.

“We are getting closer, I don’t know exactly when we will get there – underlined Barin – when we are close enough, then I will support tapering and the gradual return to a normal context at the speed at which the economy will allow it”. The day before the Fed minutes are released – Tuesday 17 August – at 7.30 pm Italian time, a speech by Jerome Powell is expected at an event with teachers and students, in which participants will be able to ask questions to the governor.


Several macro data to keep an eye on during the week. Starting Monday, with retail sales and industrial production in China relative to the month of July, after the return of the Covid nightmare and the new wave of infections in the country where the virus appeared at the end of 2019. restrictions on travel to combat the spread of the Delta variant are starting to affect more parts of the economy, so much so that the Asian stock exchanges closed the week in the red after the largest seaport in the world by freight tonnage (and the third in terms of container traffic), the Chinese one of Ningbo-Zhoushan, has closed one of its main terminals following a confirmed case of Covid.

On Tuesday, in addition to the GDP of the Eurozone, data on retail sales and industrial production in the States are expected (also in July), while on Wednesday, also overseas, the weekly index of mortgage applications arrives, the start of construction sites for new units. housing and building permits for July. Thursday spotlight on new applications for unemployment benefits in the US. In the week that ended on 7 August, new applications decreased by 12,000 units to 375,000, in line with analysts’ expectations (in the previous week they had stood at 387,000 units, a figure revised from the initial 385,000). Finally, on Friday it was the turn of German producer prices in July, which the month before rose more than expected, registering an annual increase of 8.5% after the + 7.2% of the previous month (+8.4 % consensus).

By Editor

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