Fed’s Mandate, Trade Shifts, Brazil’s Next Rate Cut: Eco Day

(Bloomberg) -- Welcome to Wednesday, Americas. Here’s the latest news and analysis from Bloomberg Economics to help you start the day:

• Federal Reserve Chair Jerome Powell is testifying before Congress this week in hearings mandated by a 1978 law that was meant to prevent mass joblessness and dissolve racial inequality. Neither has happened
• U.S. Trade Representative Robert Lighthizer will testify at two congressional hearings Wednesday on the Trump administration’s trade agenda, including his push for a so-called decoupling from China. Vietnam and Mexico have been big beneficiaries of the strategy, illustrating how a policy focusing largely on reducing American reliance on Chinese imports has just shifted production rather than reduce trade imbalances
  • Lighthizer is set to tell U.S. lawmakers that the time has come to renegotiate America’s fundamental tariff commitment at the World Trade Organization

• A quicker bottoming doesn’t mean a faster U.S. recovery, according to Bloomberg Economics

  • The U.S. has spent more than half of $3 trillion in economic rescue funds passed by Congress -- with little of the oversight intended to ensure the money goes to the right places
  • Democrats and Republicans hold starkly diverging views of the U.S. economy and the gap is widening as the pandemic persists, casting a shadow over hopes for a V-shaped recovery powered by pent-up demand as nationwide lockdowns ease
• Brazil’s central bank is expected to cut its benchmark interest rate to an all-time low as Latin America’s largest economy grapples with declines in activity and inflation forecasts due to the coronavirus
• Relationships between business leaders and Mexico’s president have deteriorated over the government’s response to the coronavirus and a tendency to put political ends over existing contracts. Yet that tension is poised to subside
• Justin Trudeau is beginning to wean millions of people off government support in what will be one of the trickiest economic policy maneuvers in Canada’s recent history
• The Brexit-supporting regions that propelled Prime Minister Boris Johnson into power are now being disproportionately hit by coronavirus and will bear the brunt of the economic fallout
• Europe’s rapid easing of lockdowns, abundant fiscal support and encouraging signs from real-time indicators point to a big leg up in the third quarter, according to Bloomberg Economics research
• The Bank of Israel wants a primarily fiscal response to the Covid-19 crisis, and will provide support including expanding a record bond-purchasing commitment if needed to keep borrowing costs low

©2020 Bloomberg L.P.