Highlights (week 34/2022)
Federal Reserve Chairman’s speech
Indeed this Friday global attention turned to U.S. Federal Reserve Chairman Jerome Powell’s speech at the Jackson Hole economic symposium.
His speech on Friday was more aggressive than anticipated, affecting stocks to decline. After his remarks, both yields on the U.S. two-year treasury and the March 2023 fed funds future were up by roughly 0.5%. Federal Reserve Chairmen made it clear that the central bank will continue raising rates to fight inflationary pressures and warned that there may be some “pain” while these measures take place.
For the second week, U.S stocks declined. The Dow tumbled 4.22%. The S&P 500 and Nasdaq Composite were down 4.04%% and 4.44%, respectively. Energy is the only sector where a positive turn was seen for the week, gaining 5%. Higher oil prices helped oil stocks, with West Texas Intermediate crude up 1.7% this week.
U.S Personal Consumption Expenditures in July
The PCE, one of the Federal Reserve’s favorite inflation indicators, fell 0.1% on a monthly basis in July and was up 6.3% on the year, less than anticipated, the Bureau of Economic Analysis reported Friday. It was expected that the PCE index would be unchanged on a monthly basis and up 6.4% on the year.
The report also showed that personal income ticked up less than expected, up 0.2% month over month versus an estimated 0.6%. The FED monitors this report closely and will be using it to make its decision in the September meeting, a meeting in which it is expected rates will be raised again.
The Stoxx 600 fell 1.68% on Friday and 2.58% for the week.