Japan Exports Fall For The First Time Since 2021
Japan’s exports fell in July for the first time in nearly two and a half years, dragged down by faltering demand for light oil and chip-making equipment, underlining concerns about a global recession as key markets like China weakened.
Dutch Economy Enter Recession As Inflation Hits
The Dutch economy has entered a recession as it shrank by 0.3% on a quarterly basis in the second quarter, a first estimate published by Statistics Netherlands showed yesterday. The euro zone’s fifth largest economy shrank for the second consecutive quarter, after a 0.4% contraction in the first three months of the year.
New York Bans TikTok On Government-Owned Devices
New York City has officiated a TikTok ban on government-owned devices, citing security concerns, joining a number of U.S. cities and states that have put such restrictions on the short video sharing app. The ban was issued over the notion of a potential Chinese government influence.
Today’s News
Federal Reserve officials at their policy meeting in July have expressed their concerns that inflation would fail to recede and that further interest rate increases would be needed. At the same time, cracks in that consensus were also becoming more apparent.
“Most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy,” according to the minutes of the U.S. central bank’s July 25-26 policy meeting published yesterday in Washington.
However, two Fed officials that could have supported such a proposal favored leaving rates unchanged instead. In a turn of events, the Federal Open Market Committee ultimately authorized a rate hike at the conclusion of the meeting, as indicated in the minutes.
The July rate hike brought the target range for the Fed’s benchmark rate from 5.25% to 5.5%, the highest level in 22 years. That marked a resumption of increases after officials left rates unchanged at the previous gathering for the first time since they began tightening in early 2022.
Other related news includes:
Fed Expects Further Interest Rate Increases For Future
Fed has indicated that it is not finished with raising interest rates with this key quote: “Most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy”.
On the flipside, the minutes did not give a definitive step on the subsequent rate decision which is due in September with claims that future moves would depend mainly on the incoming information and its implications for the outlook.
Asia Stocks Extend Declines On Fed
Shares in Asia fell today after a selloff in U.S. stocks and bonds as investors digested hawkish signals from the Federal Reserve and further signs of stress in China.
Equities in Japan and South Korea opened lower and futures contracts for Hong Kong benchmarks fell while a gauge of stocks in the region extended losses into a fifth session. The S&P 500 declined by 0.8% yesterday and the Nasdaq 100 dropped 1.1%, with heavyweights Meta Platforms Inc, Amazon.com Inc. and Tesla Inc, down more than 1.5%. U.S. futures also slipped in early Asian trading.
Summers Foresees 10-Year Yields In Coming Decade
Former U.S. Treasury Secretary Lawrence Summers cautioned that the recent run-up in 10-year yields may have further to go, and that pressures are building to keep those benchmark rates much higher than experienced over the past two decades.
“I don’t particularly see the current level of longer-term rates as any kind of peak,” Summers said on Bloomberg Television’s Wall Street Week with David Westin. Summers said that the conclusion is based in part on expectations for bigger government budget deficits “to come into focus” for investors over time.
