Daily Outlook: U.S. consumer inflation expectations for one year remain at a high level of 3.6%
The Governor of the New York Federal Reserve opposes the Fed’s faster reduction in purchases of mortgage-backed securities than Treasuries:
The President of the Federal Reserve Bank of New York, John Williams, said that the Fed’s purchase of Treasury bonds and mortgage-backed securities (MBS) can help reduce housing costs, thereby alluding to the ongoing debate among policymakers — that is, when it begins to reduce the size. Is it necessary to reduce the scale of MBS purchases at a faster rate than the reduction in the purchase of treasury bonds? “I don’t think one of these two tools is specifically focused on housing, while the other is not,” Williams told reporters after a speech at an online event hosted by the Bank of Israel on Monday. “They both affect interest rates. . Therefore, both will affect housing costs.”
U.S. consumer inflation expectations for one year remain at a high level of 3.6%:
The results of a survey released on Monday showed that US consumers’ expectations of inflation remained high in June. Consumers said last month that they expect prices to rise 3.6% in three years, the same as the previous month. However, a quarter of the respondents expect the inflation rate to reach 7%, and another quarter believe that it will rise by 1.3%. This is the biggest gap since the New York Fed started such an investigation in June 2013.
The EU postponed the advancement of digital taxation to focus on global taxation agreements:
The European Union said on Monday that it will postpone the advancement of the controversial digital tax in order to focus on negotiations on a broader global minimum tax rate agreement supported by the world’s major economies. The United States has been lobbying against a digital sales tax to prevent Silicon Valley giants from hitting their businesses in Europe. The European Union has stated that if there is no progress in more uniform corporate taxation, it will impose this digital tax. After the principles of the global tax treaty are supported by the G20, the possibility of reaching a global agreement seems to be higher.
There is still no sign of breaking the deadlock in the OPEC+ negotiations, and the window to increase supply in August is closing:
A week ago, OPEC and its allies stopped production negotiations due to a fierce dispute. Now, the window to increase oil production in August is closing, but there is no sign of a possible agreement. The OPEC+ representative stated that although other coalition members hope to reach a compromise, there is little sign that Saudi Arabia and the United Arab Emirates have made progress in resolving disputes over how to calculate the reduction in production. At the same time, representatives who declined to be named because the news has not been made public revealed that both of the above-mentioned two countries have begun to lock in the supply of customers for the next month. This has caused the two countries to have little room for adjustment even if the negotiations suddenly achieve a breakthrough.
ECB official: The central bank may use tools to curb banks’ excessive dividend payments:
A senior ECB official said that the central bank may take steps to ensure that the banking industry does not pay excessive dividends later this year. Margarita Delgado, a member of the European Central Bank’s Supervisory Board, said in an interview on Monday that the central bank will call on the banking industry to remain “cautious.” As the European economy came out of the worst period of the epidemic, her remarks made the possibility of a sharp increase in dividends less likely. Delgado said that the European Central Bank will push those banks that are proposing large dividends to return to a more even dividend policy. “If the European Central Bank does not accept the recommendations of the Supervisory Board, we have other tools.”
The U.S. Department of Agriculture lowered its estimate of China’s soybean imports:
The U.S. Department of Agriculture lowered its forecast for China’s soybean imports, reducing the current 2020–21 season estimate by 2 million tons to 98 million tons, and the next quarter will drop by 1 million tons to 102 million tons. The agency also lowered its soybean export forecasts to Argentina and Brazil, saying that high prices help limit demand from China.