Moderate US inflation; no change in BoE and ECB strategy; sharp monetary tightening in Turkey
US: Initial jobless claims (Spept. 8): 204k vs 210k expected (prior: 205k revised from 203k)
- Continuing claims: 1696 k after 1711 k past week.
US: CPI (Aug.): 0.2% m/m vs 0.3% expected (prior: 0.2%)
- Core CPI: 0.1 % m/m vs 0.2 % m/m; headline inflation has moderated from 2.9% y/y to 2.7% y/y and core inflation from 2.4% y/y to 2.2% y/y.
- While energy prices have rebounded by 1.9% m/m, and rents were up by a regular 0.3% m/m (3.3% y/y), prices of apparels, medical and of leisure eased during the month.
- Trend in inflation should continue to moderate in coming months, in absence of shocks, but staying above the 2% mark.
UK: BoE has left key rates unchanged at 0.75%.
- The Bank remained confident on growth and a rebound is expected on Q3. Slack in the economy looks at a low level, which could generate future upside pressures on domestic costs.
- The Bank mentioned it expects a smooth transition with the EU; a tightening bias remains in place.
Eurozone: The ECB has not changed its strategy
- Statement on strategy has not changed: QE will be reduced from EUR 30 bn to EUR 15 bn in October and should end in Dec. if medium-term inflation outlook stays in line with ECB’s target. Interest rates should not move before Q3-19.
- The ECB has revised down its growth outlook by 0.1 pp for 2018 and 2019 at 2% and 1.8% respectively (1.7% expected in 2020). Inflation forecasts were maintained at 1.7% for the period 2018-2020.
- No debate about reinvestment rule or any twist operation; capital rule remains the key principle.
- QE and Italy: QE is used to restore medium-term inflation and not to help one country or sector to secure its refinancing, said Draghi.
- Rising risks since last meeting. The main risk is protectionism.
Turkey: Central Bank has increased its key rates from 17.75% to 24%.
- Despite M. Erdogan called for an easing in rates, the bank has increased its rates, slightly more than consensus expectations (21%).
- The statement from the bank justified a strong tightening due to a high inflation despite weaker demand and it mentioned this tightening will remain in place as long as inflation has not eased.
Switzerland: PPI-import prices (Aug.): 0% m/m as expected (prior: 0.1%)
- Import prices were flat over the month; the yearly trend has moderated from 6.9% y/y to 5.7% y/y; producer prices were up by 0.1 % m/m, up by 2.2% y/y. Prices of food and of some raw materials have moderated over the month.
Sweden: GDP (Q2-18): 0.8% q/q vs 0.9% expected (prior: 0.5%)
- Q2 estimate has been revised down from previous 1% q/q; the rebound in Q2 was mainly driven by consumption and inventories while investment and net trade were negative.
France: CPI (Aug.): 0.5% m/m vs 0.6% expected (prior: 0.6%)
- Final data confirmed the rebound in Aug., driven by prices of clothes. Inflation was up by 2.6% y/y.
Germany: CPI (Aug.): 0% m/m as expected (prior: 0%)
- Prices of clothes and energy were up during the month, balanced by lower education and leisure prices.
UK: RICS house price balance (Aug.): 2% as expected (prior: 4%)
- Balance of opinions on housing has moderated after a rebound in July; outlook on prices, sales and demand has deteriorated.
Brazil: Retail sales (July): -0.5% m/m vs 0.3% expected (prior: -0.4% revised from -0.3%)
- Trend remained negative, with some rotation across sectors; the monthly fall was fueled by clothes, personal items and furniture.