On Capitol Hill, Democrats and Republicans seem to have come somewhat closer in their dispute over the scope and design of the new corona bailout package. While the Democrats had originally tabled a stimulus package worth more than USD 2 trillion, the compromise is said to be “only“ about USD 500bn. If the Democrats have their way, the package should above all also secure the financing of the ailing US postal service so that a postal vote in corona times is guaranteed. But the program should also continue to include loans for small and medium-sized enterprises to safeguard jobs.
In the minutes of the Monetary Policy Committee's (FOMC) last interest rate decision of 28th to 29th July, published yesterday evening, the US Federal Reserve drew particular attention to the existing risks and uncertainties. The economic recovery in the US was dependent on the further course of the corona crisis. The pandemic continues to pose a considerable risk to the economic outlook. Without containment of the pandemic, a full economic recovery would be difficult, said Federal Reserve Chairman Jerome Powell. The Fed therefore remains prepared to use all available instruments if necessary.
Investors, however, do not seem satisfied with the foreseeable compromise on Capitol Hill. On the New York Stock Exchange, the indices fell in the middle of the week, following some record highs that had been reached in the last few days. The Dow Jones Industrial closed -0.31% lower at 27 692.88 points and the S&P 500 fell -0.44% to 3 374.85 points. However, Wall Street was also able to report another record yesterday as Apple shares reached a market value of over USD 2 trillion for the first time! Asian stocks mostly followed the negative data from the US, especially after the Federal Reserve's cautious economic assessment. In Tokyo, the Nikkei Index, which comprises 225 stocks, lost around -1% and in Hong Kong the Hang Seng Index was down around -2%.
US President Trump said briefly and succinctly that he did not want to talk to China's leadership about trade relations at this time. Originally, the negotiating delegations of the two countries should have assessed the Phase-1 trade agreement agreed upon at the beginning of the year last weekend and discussed how to proceed. For the time being, there is also no new date for the top-level trade talks, the White House said.
The cost of living in the euro-area continued to rise only slightly in July. Over the year as a whole, the inflation rate was +0.4% after +0.3% in June. According to Eurostat, consumers had to pay more, especially for food (+3.1%), while a decline in energy prices (-8.4%) kept inflation in check. In Germany, consumer prices in July remained unchanged compared with the same period of the previous year. In France and Italy, prices rose by +0.9% and +0.8%, respectively. In Greece and Spain, however, consumer prices fell sharply by -2.1% and -0.7%, respectively over the year.
In the United Kingdom, the annual rate of consumer price inflation in July reached its highest level since March of this year at +1.0%. However, the inflation rate is still well below the Bank of England's target of two percent.
|08:00||SZ||Exporte (July, m/m)||+7.9%|
|08:00||SZ||Importe (July, y/y)||+5.5%|
|14:30||US||Philly Fed Manufacturing Indicator (August)||+24.1|
|16:00||US||Leading Indicator (July)||+2.0%|
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Source: LGT Bank (Switzerland) Ltd.
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