Lonely ECB, U.K. Consumers Glum, China Pumps Funds: Eco Day
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Happy Friday, Europe. Here’s the latest news and analysis from Bloomberg Economics to take you through to the weekend:
- With central banks from Washington to London this week signaling more alarm over faster inflation, the ultra-stimulative path of the euro zone and some of its neighbors appears lonelier than ever
- Bloomberg Economics expects the labor market and a softer growth outlook to stay the BOE’s hand for longer than financial markets expect. But it now looks like a first hike will come in May, six months earlier than we forecast prior to the decision
- U.K. consumer confidence fell at its sharpest pace since coronavirus lockdown rules were tightened almost a year ago, reflecting a surge in inflation and looming tax increases
- China’s central bank continued to pump liquidity into the financial system on Friday as policy makers sought to avoid contagion stemming from China Evergrande Group spreading to domestic markets. The bank will also push to reform its emergency-funding facility to make it easier for banks to access cash, a move that could help smooth out the volatility in money market rates
- Yields on long-term Treasuries surged the most in 18 months as traders brought forward their expectations for the first hike by the Fed to the end of 2022 following a hawkish policy meeting
- U.S. household net worth surged to a fresh record in the second quarter as Americans enjoyed an ebullient stock market and the largest-ever increase in the value of their real estate holdings
- Japan’s consumer prices stopped falling in August for the first time in 13 months, ending the country’s longest deflationary stretch since 2011. In other news there, the nation’s ruling party is set to choose a new prime minister from among four contenders, of whom two are women -- signaling potential cracks in the country’s durable glass ceiling
- Australia should deploy lending curbs to cool a red-hot housing market, the International Monetary Fund said, while cutting its 2021 economic growth forecast by 1 percentage point due to a renewed coronavirus outbreak
- Traders are seeing hints that India’s central bank is seeking to drain record liquidity from the banking system, another sign that the global flood of pandemic-era easy money may begin to ease
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