Recent economic data from the United States shows weak demand signs while warning of mild stagflation risks based on sustainable labor productivity growth.
Next week, the United States will announce CPI, PPI, and important labor data, setting the stage for expectations of a Fed rate cut in September and subsequent developments in the financial market.
MAIN CONTENT
Last week's economic data reflects declining demand and rising service prices, highlighting the risk of mild stagflation.
Next week will announce CPI, PPI, labor data, and many speeches from Fed leaders.
Expectations for Fed rate cuts remain unchanged, but market volatility risks still loom due to trade tensions.
What does last week's economic data from the United States reflect about the health of the economy?
Last week, U.S. economic data was mild but showed clear signs of slowing demand. Although labor productivity remains stable, rising prices in the service sector along with slowing economic activity suggest a mild stagflation outlook.
Stagflation is a state of rising prices accompanied by weak growth, directly affecting monetary policy and investment decisions. Economists believe that this combination puts pressure on policymakers to balance growth and control inflation.
What important economic events will be announced next week?
The United States will announce three key indicators including the Consumer Price Index (CPI) for July, the Producer Price Index (PPI) for July, along with data on initial unemployment claims for the week ending August 9.
Additionally, many Fed leaders with voting rights in the FOMC such as Barkin (Richmond Fed), Goolsbee (Chicago Fed), and Bostic (Atlanta Fed) will have speeches surrounding monetary policy and the U.S. economic outlook.
"Upcoming data will provide clearer guidance on the Fed's monetary trends as well as its impact on the global financial market."
Michael G. Barkin, President of Richmond Fed, 2024
How might the market react to these important figures?
If retail data at the end of next week indicates a more difficult economic situation than expected, the outlook for Fed rate cuts in September along with further cuts during the year remains unchanged.
However, the positive impact of CPI on the USD may be limited and only short-term. Moreover, statements about the possibility of additional tariffs from the U.S. government could cause more volatility in the financial market in the near future.
"The risk of escalation in trade policy increases the risk of a sell-off of U.S. assets if the situation spirals out of control."
Financial market analyst, 2024
What role do the Fed chair's speeches play this week?
The three Fed chairs, Barkin, Goolsbee, and Bostic, are all voting members of the FOMC, so their speeches next week play an important role in conveying monetary policy signals to the market.
Information from these speeches helps investors assess upcoming interest rate decisions, as well as expectations for monetary policy in the second half of the year. Thus, their remarks will help shape global financial trading and investment trends.
Frequently Asked Questions
How do CPI and PPI data affect the Fed's interest rate decisions?
CPI and PPI are important indicators that reflect inflationary pressures, helping the Fed assess the necessity of interest rate adjustments to stabilize the economy.
Why are Fed leaders' speeches given such attention?
These leaders have voting rights on the FOMC, so their views directly influence monetary policy, affecting the entire financial market.
How will the financial market react if economic data is worse than expected?
There will usually be a sell-off reaction of U.S. assets, increasing expectations of interest rate cuts to support the economy.
How do trade risks affect the cryptocurrency and financial markets?
Tax increases and trade tensions are putting pressure on the global market, causing strong volatility and high risks for financial assets, including cryptocurrencies.
How long will the interest rate cuts last?
This depends on actual economic developments and inflation data, but expectations for interest rate cuts may continue at least in the second half of 2024.
Source: https://tintucbitcoin.com/fed-doi-mat-quyet-dinh-cat-lai-thang-9/
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