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Livesquawk - US Briefing - Wednesday 21.07
US Briefing - Wednesday 21.07
Headlines
  • US’s Schumer Heads For An Infrastructure Vote Defeat As Talks Drag
  • Punchbowl News: US's McConnell Taking V. Hard Line On Debt Ceiling
  • US-German Deal On Russia's Nord Stream 2 Pipeline Expected Soon
  • US's Sherman To Visit China On July 25-26 For Talks With China's Yi
  • WHO Chief Warns: World Going Into ‘Early Stages Of Another Wave’
  • Fed's Powell Enjoys Support For Reappointment, But He’s Not A Lock
  • Germany Approves EUR400Mln Aid Package For Victims Of Floods
  • UK June Gvt Borrowing Pressures Eases As The Economy Rebounds
  • API Crude Surprise 0.81Mln Build; Gasoline: +3.3Mln; Distillate: -1.2Mln
  • Bitcoin Extends Gain After Retaking Closely Watched USD30,000 Mark
  • China Raises Volume Of Metal Sales From Reserves To Cool Market
  • Coca-Cola Hikes FY Organic Rev. View; Verizon Raises Adj. EPS View
  • Health Insurer Anthem, Johnson & Johnson Boost FY Adj. EPS Views
  • J&J Shot Raises Fewer Antibodies Against The Delta Variant In Study
  • Netflix Beats On Paid Subscriber Growth, But Misses Earnings Views
  • SAP Slumps; Jefferies: Q2 Cloud Revenue Slightly Below Expectations
  • ASML Raises FY Sales Growth View, To Do EUR9Bln Share Buyback
  • Daimler Falls As Cuts Mercedes-Benz Sales Outlook On Chip Shortage
  • Next Sees Sales `Materially Ahead'; Raises Guidance For Rest Of Year
Commentary
With ECB Likely On Rate Hold, Focus Turns To Shifts In Inflation Target, Forward Guidance

FRANKFURT – The meeting of Eurozone central bankers on Wednesday and Thursday is likely to be fractious as the hawks and doves square off over forward guidance after this month’s adjustment of the inflation target. Following the lead of the US Federal Reserve, the European Central Bank raised its target for consumer price growth. For the Frankfurt-based bank, the increase was a product a strategic review, its first in 18 years. The ECB decided to lift its inflation goal to 2% from near but below that mark. A number of analysts say the policy change fell short of the shift at it US counterpart, which announced in August of last year a willingness to permit inflation that exceeds 2% without raising interest rates.

 

The ECB suggested a readiness to adjust rates should inflation over- or undershoot the new goal by too large a margin. “This target is symmetric, meaning negative and positive deviations of inflation from the target are equally undesirable.” ECB President Christine Lagarde is scheduled to face journalists following Thursday’s monetary policy decision – no rate changes are expected – and she will likely field questions on the increase in the inflation target and the other actions taken following the review, which the bank said included plans to add housing costs to its basket of consumer prices.

(LiveSquawk – Continue Reading)

UK: Why We Don’t Expect A More Hawkish BoE Next Month

Will the Bank of England turn more hawkish at its next meeting on 5th August? This is a question that’s arisen from some unexpectedly hawkish comments from committee members over recent weeks. Outgoing ‘external’ MPC voter Gertjan Vlieghe recently floated the possibility of a 2022 rate hike, while his colleague Michael Saunders went one step further by suggesting the current QE purchase scheme should be wound up early. Both had been among those advocating the possible use of negative interest rates only a few months ago.

 

These hawkish comments came alongside another upside surprise to inflation. Headline CPI is now at 2.5%, and this most recent rise is only partly explained by rising energy prices and ongoing supply chain issues. We’ve seen a notable increase in the cost of various consumer services after the reopening, which has also been coupled with a bounce-back in clothing prices after heavy lockdown-discounting. Tax changes and restaurant subsidies from last summer mean the next few readings will be volatile, but the main story is that inflation may now peak close to 3.5% later this year/early next. Despite all of that, we wouldn’t bet on the Bank of England changing its tune at the August meeting – nor making any changes to its QE programme.

(ING - Continue Reading)

Senate Democrats' USD4.1Tln Plan B On Infrastructure

Senate Democrats are weighing a Plan B if the bipartisan infrastructure negotiations fail: adding the nearly $600 billion in spending Republicans have already accepted to the $3.5-trillion plan they want to enact alone — a $4.1 trillion overall price tag. The combination gets the roads and bridges both parties favour; the reconciliation package covers the "soft" climate and child care items wanted by progressives, and Republicans would have to answer why if they oppose a measure that includes all of what they want.

 

The bipartisan talks, which important Democrats like Sens. Joe Manchin (D-W.Va) and Kyrsten Sinema (D-Ariz.) drove and said were critical to securing their votes, are in danger of falling apart in a dispute over how to pay for spending in the $579 billion framework already negotiated. Some Senate Democrats and Republicans also have process concerns: meeting the demand of Senate Majority Leader Chuck Schumer (D-N.Y.) to move the process along on Wednesday before a bipartisan bill is even drafted. The vote is designed to put pressure on negotiators to wrap up talks, but it could also be what ultimately kills them. Republican senators have asked Schumer to push the vote to Monday.

(Axios – Continue Reading)

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