August 15, 2017
U.K. inflation remains unchanged, Dudley talks up another Fed hike this year, and OPEC’s shale problem is only getting worse. Here are some of the things people in markets are talking about today.
The U.K. inflation rate was unchanged at 2.6 percent in July, slightly below economist forecasts, with the Office for National Statistics saying the cost of motor fuel kept a lid on the headline rate during the month. Factory input prices increased 6.5 percent on the year, down from 10 percent in June, as the effects of the pound’s post-Brexit tumble began to fade. Should inflation prove to be nearing its peak, as economists expect, today’s data will further weaken the case for Bank of England tightening. The pound dropped to $1.2912 following the release, the lowest level for the currency in over a month. Elsewhere, inflation in Sweden rose above the central bank’s 2 percent target for the first time in almost six years.
Federal Reserve Bank of New York President William Dudley said it isn’t unreasonable to expect an announcement on how the Federal Reserve plans to reduce its $4.5 trillion balance sheet in September, adding that he would be in favor of another rate hike this year if the economy holds up. In an unusual move, Dudley weighed in on the race for the position of Fed Chair, saying former Goldman Sachs Group Inc. executive and White House economic adviser Gary Cohn was a “reasonable candidate” for the job. Minutes from the July policy meeting, which may give some hint as to the FOMC’s plans, are scheduled to be published tomorrow.
A barrel of West Texas Intermediate for September delivery was trading at $47.68 as of 5:30 a.m. Eastern Time after dropping 2.5 percent yesterday as investors await U.S. stockpiles data. Neil Atkinson, head of the International Energy Agency’s oil markets and industry division, said that OPEC would have to dig in for the long haul if the organization wants to succeed in reducing the global supply glut. The biggest thorn in OPEC’s side continues to be shale, with U.S. production set to reach a fresh record next month, according to an Energy Information Administration projection. Gas production from shale is also taking off.
President Donald Trump has lost more CEOs from his White House business advisory group. Under Armour Inc.’s Kevin Plank and Intel Corp.’s Brian Krzanich followed Merck & Co.’s Kenneth Frazier in resigning yesterday, with all three citing the political climate in the U.S. as they publically distanced themselves from the president. Trump criticized Merck’s pricing and employment polices on Twitter following Frazier’s announcement. The president denounced white supremacists yesterday as the administration sought to counter a backlash against his perceived failure to hold hate groups accountable.
U.S. retail sales data for July is due to be released at 8:30 a.m., with expectations for a 0.3 percent rise in the headline and ex-auto numbers. There are earnings from Home Depot Inc. and TJX Cos Inc. due today, which will add to the overall picture of the state of U.S. retail and the American consumer. The July import index and Empire manufacturing data will also be released at 8:30 a.m.