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19 Aug 2013
Flash: Looming September Fed meeting continues to drive markets – UBS
FXstreet.com (New York) - America's recent data releases suggest the Federal Reserve remains on track to announce at its September 17-18 Open Market Committee meeting that it will start tapering its asset purchases from Q4'13, notes Mohi-uddin, Mansoor at UBS.
Key quotes
First, July's retail sales increased for the fourth month in a row with ex-auto sales up 0.5%m/m. In addition, the 'retail sales control group' that feeds into US GDP data also rose 0.5%m/m. “UBS Economics suggests real consumption at the start of Q3'13 appears to be growing at a 2.0% annualized rate - faster than the 1.8% expansion achieved in Q2.”
Moreover, August's housing market index increased from 56 to 59. Stronger sentiment from homebuilders was reflected in July's housing starts rebounding from 846k to 896k. Building permits also rose 2.7%m/m.
As such, “the Fed's fears about the low levels of inflation in the US economy have been helped by July's CPI release. Last month headline and core consumer prices both rose 0.2%m/m. As a result CPI excluding food and energy is now increasing by 1.7%y/y. That’s markedly better than the 1.2%y/y rate currently recorded by the Fed's target measure of inflation - changes in core Private Consumption Expenditure prices.”
Ultimately, America's labor market also continues to improve with jobless claims falling by 15k to 320k. This has pulled the four-week moving average down to 332k. “UBS Economics notes the data may have been distorted by seasonal adjustment difficulties caused by summer manufacturing plant shutdowns. However, the underlying direction in claims is clearly downward with the latest weekly data at its lowest levels since late 2007.”
Key quotes
First, July's retail sales increased for the fourth month in a row with ex-auto sales up 0.5%m/m. In addition, the 'retail sales control group' that feeds into US GDP data also rose 0.5%m/m. “UBS Economics suggests real consumption at the start of Q3'13 appears to be growing at a 2.0% annualized rate - faster than the 1.8% expansion achieved in Q2.”
Moreover, August's housing market index increased from 56 to 59. Stronger sentiment from homebuilders was reflected in July's housing starts rebounding from 846k to 896k. Building permits also rose 2.7%m/m.
As such, “the Fed's fears about the low levels of inflation in the US economy have been helped by July's CPI release. Last month headline and core consumer prices both rose 0.2%m/m. As a result CPI excluding food and energy is now increasing by 1.7%y/y. That’s markedly better than the 1.2%y/y rate currently recorded by the Fed's target measure of inflation - changes in core Private Consumption Expenditure prices.”
Ultimately, America's labor market also continues to improve with jobless claims falling by 15k to 320k. This has pulled the four-week moving average down to 332k. “UBS Economics notes the data may have been distorted by seasonal adjustment difficulties caused by summer manufacturing plant shutdowns. However, the underlying direction in claims is clearly downward with the latest weekly data at its lowest levels since late 2007.”