Policy and data updates
Robust global economic growth – The world economy continues to grow above forecast, at a predicted pace of between 4% and 4.5% in Q3. The most surprising figures have come from the developed world; with Canada posting an astonishing 4.5% growth pace in Q2. In the same period, the US and Eurozone saw healthy growth rates of 3% and 2.3% respectively.
Federal Reserve – After the annual Jackson Hole meeting in August, the Federal Reserve’s vice-chairman Stanley Fischer resigned for “personal reasons”. His departure, combined with muted wage growth, raises further doubts about the pace of QE tapering and interest rate increases over the next several months.
ECB – Pressure escalates on the ECB to begin policy tightening as growth and manufacturing output accelerates in the Eurozone. The bank seems set on deciding the path of its ongoing QE programme in October.
Brexit tensions escalate – The rhetoric over Brexit has increased as negotiators on either side trade accusations. While David Davis insists that the EU “lacks imagination” with respect to the future trading arrangement, Michael Barnier claims the UK needs “educating” about Brexit’s true consequences.
Debt, taxes and Hurricane Irma – Hurricane Irma has wrought destruction in the Caribbean and Florida. This, combined with Houston flooding helped spur Trump to agree a 3-month debt-ceiling extension with the Democrats, avoiding for now a technical default. It also seems to have delayed his tax reform plans.