020 7898 0500Federal Reserve Chair Jerome Powell delivered a speech at the Jackson Hole Symposium on Friday, in which he said that the Fed is not seeing signs that inflation is accelerating above target. Given that increasing interest rates is a means of keeping inflation under control, the markets took this to mean that the central bank might well not continue hiking rates in an aggressive way. Indeed, Powell admitted as much when he repeated the message that any rate hikes will only be gradual for the foreseeable future.
The dollar swiftly tumbled against sterling and the euro, with the single currency hitting its highest level against the dollar for three weeks. This will no doubt please Donald Trump, although he could be forgiven for having more important things on his mind at the moment.
Durable goods orders were disappointing, as they fell by 1.7% when a drop of 0.5% had been expected by the markets. However, there was some good news, with capital goods orders climbing by 1.4% in July. Non-defence capital goods excluding aircraft are seen as a key indicator for business investment, so the figure is a positive for the US economy.
Today we have the goods trade balance for July, while tomorrow we will have the second estimate of the GDP growth rate for the second quarter of 2018. It is expected to come in at 4% from 2.2% in the previous period.
