Eventual Brake

Federal Reserve officials agreed last month on the need to eventually dial back the pace of interest-rate hikes but also wanted to gauge how their monetary tightening was working toward curbing US inflation. “As the stance of monetary policy tightened further, it likely would become appropriate at some point to slow the pace of policy rate increases,” according to minutes of the Federal Open Market Committee’s July 26-27 meeting. Market participants saw the risk of over-tightening policy but also of entrenched inflation.

UK Strikes

Britons face some of the most widespread disruption of the so-called summer of discontent over coming days as rail workers stage nationwide strikes and bus and subway staff hold stoppages in London. The industrial action on public transport will be followed Sunday by the start of an eight-day strike by dockers at Felixstowe, the UK’s biggest container port, which threatens to create shortages of everything from toys and consumer electronics to clothes and furniture. Companies across Britain are suffering a surge in industrial action as soaring inflation stokes pay claims against a background of labor shortages. 

US-Taiwan Trade

The US and Taiwan have started formal negotiations on a bilateral trade initiative to deepen economic ties, a move likely to inflame already high tensions with China as Taipei looks to reduce its economic dependence on Beijing. The first round of trade talks is set to take place “early this fall,” the Office of the US Trade Representative said, unveiling a negotiating mandate for the US-Taiwan Initiative on 21st Century Trade announced in June. Discussions will cover areas such as trade facilitation, regulatory practices, anti-corruption standards and deepening agriculture trade.

Help En Route

A fleet of ships carrying diesel is heading for European markets facing energy-security threats from high temperatures, soaring gas prices, and Russian disruption. Five ships transporting close to three million barrels are poised to move from Asia to Europe so far in August, preliminary data from Vortexa show. That’s the most in five months on a barrel-per-day basis. Shipments from the Middle East are also set to expand to help ease challenges in Europe, which faces a perilous winter.

Coming Up…

European equity futures nudged higher while Asian shares fell after the Fed minutes and a dim Chinese outlook sapped sentiment. Esther George and Neel Kashkari, regional Fed presidents, speak at separate events. Expected data include Norway second-quarter GDP. Supply-chain pressures are in focus as Applied Materials delivers earnings results. Estee Lauder and Adyen are among other companies on deck to report.

(Source: Bloomberg, August 18-2022)