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Weekly update: week 34
According to the White House there is no recession at hand, Larry Kudlow stated this week that US economy is in great shape and if the Fed would have lowered her interest rate faster it would have been performing even better. This is what would be causing the current lag in growth. In contrast the US Industry shrank for the first time in 10 years, the service economy sees her growth deteriorate and fears of a recession rise. However, the unemployment rate keeps lowering. Mixed signals feeding uncertainty. Powell gave on Friday his speech on the course of the interest rates. “The interest rate lowering was a mid-cycle thing and should be considered as a stand-alone measurement.” As a consequence, the course of the Fed and its expectations of the US economy would remain more or less in line with previous speeches, maintaining stability and predictability of the Fed. Soon after Trump and China announced a further escalation of their trade war vaporizing the effects of Powell speech before the echo of it had died out. To be continued…
- Witte Huis: geen recessie in zicht – FD (18/8/2019)
- Amerikaanse industrie krimpt voor het eerst in tien jaar tijd – FD (22/8/2019)
- De dag van Powell liep niet helemaal zoals vooraf gedacht – FD (24/8/2019)
Even though Germany is facing a potential recession, other Western economies like the Netherlands and Denmark show more robust economies. Some state that this is due to the lack of innovation in the automotive industry in Germany during the previous upswing. With stable European demand many Western economies can keep up growth numbers. Germany announced that they are willing to let the black “0” slide in their government budget, in favour of stimulating the economy. The announcement by the German minister finance, although positive, is potentially not enough to turn the tides. Parallel Germany offered a 30-year, zero coupon bond with a negative return, hoping to collect 2 billion with it. The success was average, and they were only able to collect half of the expected amount. As the fog surrounding the ECB’s actual policy, interest rates on mortgages in other countries keep experiencing downward pressure and in Denmark, Jyske bank will charge negative interest rates on saving deposits.
- Minister Scholz: Berlijn heeft oorlogkas van E50 Miljard – FD (18/8/2019)
- Nederland gaat stug door terwijl de Europese motor sputtert – FD (18/8/2019)
- Italiaanse rente daalt na val regering – FD (20/8/2019)
- Primeur: Duitse overheid wil nu ook een dertigjaarslening zonder couponrente slijten – FD (20/8/2019)
- Negatieve spaarrente in Denemarken – FD (20/8/2019)
- Weinig animo voor Duitse dertigjaarslening met negatief rendement – FD (21/8/2019)
- De terugkeer van ‘s werelds pijnlijkste short-strategie – FD (21/8/2019)
- Stimulering ECB in september is vrijwel zeker, de vraag is alleen nog hoe – FD (22/8/2019)