The Day Today 21st June 2022

  • Fed Bullard said “US inflation expectations could become unmoored without credible Fed action”.
  • Former US Treasury Sec Lawrence Summers said the US jobless rate would need to rise above 5% for a sustained period in order to curb inflation.
  • RBA Lowe speech “the level of interest rates is very low…how fast we increase interest rates, and how far we need to go, will be guided by the incoming data”
  • RBA Minutes for June 7th “three-year yield target introduced in March 2020 as part of the Bank’s COVID-19 pandemic response…served its purpose of lowering funding costs” they also noted “The exit from the policy in late 2021 had been disorderly and…caused reputational damage to the Bank”.
  • EU warned against fossil fuel backsliding as Germany, Austria and the Netherlands start to fire up coal plants, Ursula von der Leyen said there needs to be a “massive investment in renewables”.
  • Britain will have the biggest rail strike in 30 years as unions reject 3% pay offer.

Asian equities rose, the MSCI Asia-Pacific index broke an eight day slide.

The Week That Will Be

1. The Fed
Powell got tough with the markets last week but this week he faces his toughest audience – Congress. With the mid-term elections less than six months away, the politicians will be challenging him over how the economy can hope to avoid a hard landing now that interest rates are climbing at the same time as inflation. This is why the third sentence of Powell’s opening statement was “We at the Fed understand the hardship high inflation is causing”. Expect more of this when he is interrogated by the Senate on Wednesday and . . .

On this day in 1919 the German Kaiserliche Marine was scuttled at Scapa Flow.

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