The most important economic events this week from the 20th to the 24th of SEP 2021

Tuesday, September 21, 2021 - 15:27
Point Trader Group
The most important economic events this week from the 20th to the 24th of SEP 2021

An exciting new week for central banks around the world. We are waiting for comments from the Bank of Japan, and waiting to see if the Fed will announce that it will start reducing bond purchases? The Bank of England appears to have been more hawkish, but will it back down? In addition to the central bank meetings, the United States began to talk about raising the debt ceiling. Treasury Secretary Janet Yellen said the US will run out of money within a month unless the debt ceiling is raised. Also, as the Airgrand saga continues in China, will it be saved, or will it fail? Also pay attention to the Canadian dollar as voters headed to the polls on Monday!

 

Bank of Japan

Last week, despite Kuroda's optimistic press conference on the economy, he also indicated that inflation will only be around 1% in 2023 and that he is willing to do more to support the economy, if needed. With the upcoming elections and potential candidates promising new fiscal stimulus measures.

 

Federal Open Market Committee

The Federal Open Market Committee, led by Jerome Powell, meets on Wednesday as well. Before Powell spoke at the Jackson Hole symposium, in which he did not indicate that the Fed was ready to taper, the situation was more inclined to taper off quickly. This seemed to be an opportunity for Powell to announce that the Fed would start tapering off. Unfortunately, this has not been the case, as Powell said there is still a lot of ground to cover in terms of maximizing employment. What does this mean? This means that Powell's voice is the only voice that matters. The August Nonfarm Payroll report was the only one since Jackson Hole. The release was much weaker than expected +750,000, and the actual figure at +235,000. It looks like the Fed will be dwindling by the end of the year; However, the question remains about timing. Will it be announced at the meeting this week? Not if Powell is as peaceful as he was in Jackson Hole!

 

Bank of England

With inflation rising and fewer people receiving employment benefits, the Bank of England members will be tempted to reduce the pace of their bond purchases until the end of the year. The central bank indicated in its last meeting that it will start reducing the number of bonds it owns by not reinvesting the proceeds when rates reach 0.5%. Additionally, they said they will start selling the bonds they own when rates reach 1%. That's cool a few years later, but what about now? Inflation released last week showed that headline inflation reached an epidemic level of 3.2%. Central bankers said that except for inflation rising to 4% in the fourth quarter and early 2022. The number of claimants was -58,600, a move that doubles expectations! With that said, August retail sales were -0.9% vs. +0.7% expected and a lower revision of -2.8% for July. Traders will be watching whether the Bank of England votes to cut bond purchases and, if so, how much. If they don't cut, the traders will monitor how many members will vote to cut (taper). At the last meeting, the vote was 8-1, and Saunders was the only defector.

 

US debt ceiling

Treasury Secretary Janet Yellen has warned that the US will run out of money within a month if the debt ceiling is not raised. If that happens, the United States will not be able to meet its debt obligations. This would cause the US credit rating to be lowered by rating agencies, making everyone unhappy. Will they raise it? US Senate Minority Leader Mitch McConnell says Democrats have those tools and means to do so and will have to "work on their own." Senate Majority Leader Chuck Schumer said he is working with President Biden and House Leader Nancy Pelosi on a number of different options. Could the stress have triggered a risk-off in US stocks last week?

 

worry about china

Tensions between China and the United States flared up again. In addition to China's concerns about the agreement between the United States, the United Kingdom and Australia, which grants Australian nuclear submarines, human rights issues and government regulations over Chinese companies remain a growing source of tension. Notwithstanding, there is also the case of China's No. 2 real estate developer, Evergrande. The company has no money and cannot sell assets. The owners of the company's debts try to get rid of them at much lower prices but are having difficulty finding buyers. If the company were to collapse, it could cause a ripple in global markets.

 

Canadian elections

Canadian voters go to the polls on Monday for the federal election. Currently, Prime Minister Trudeau has a minority in Parliament. He hopes the success of the vaccine launch will elevate it to the Prime Minister with a majority in Parliament.


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