Daily Outlook: US consumer confidence fell sharply in August, reaching its lowest level since 2011

JRFX
4 min readAug 16, 2021

US consumer confidence fell sharply in August, reaching its lowest level since 2011:

U.S. consumer confidence fell to its lowest level in nearly a decade in early August, as Americans became more concerned about the economic outlook, inflation and the recent surge in new crown cases. Data released on Friday showed that the initial value of the University of Michigan Consumer Confidence Index fell 11 points to 70.2, the lowest since December 2011. This number is far below the estimates of all economists surveyed by Bloomberg. If consumers control spending next, then the decline in confidence may bring a more pronounced slowdown in economic growth in the coming months. The recent deterioration in consumer confidence highlights the impact of rising prices and concerns about the potential economic impact of the delta variant virus on American sentiment.

U.S. dollar liquidity is expected to continue to be surplus, and the Fed’s overnight reverse repurchase tool usage is expected to hit a new high:

The Fed’s overnight reverse repurchase instrument turnover is expected to continue to hit a record high in the coming week, as cash from government-backed enterprises (GSE) still floods the market, exacerbating the oversupply of liquidity. Abundant cash should lead to weaker repurchase rates in the market. In contrast, the Fed’s 0.05% overnight reverse repurchase rate has become more attractive. According to ICAP data, the global general repurchase rate overnight reported 0.04% for the first transaction on Friday, and the bid-ask spread was 0.05%/0.03%.

The US government called on OPEC to “open the gates” to increase production, and the oil industry forecasting agency has no intention of responding:

The US government called on the Organization of the Petroleum Exporting Countries (OPEC) to “open the gates” to increase production to support the global economic recovery, but the world’s largest oil industry forecasting agency did not “help.” Instead of responding to the Biden government’s call for increasing production, they have lowered their OPEC oil production expectations for the next few quarters to maintain market equilibrium. The International Energy Agency (IEA), the U.S. Energy Information Administration (EIA) and OPEC have lowered their expectations for OPEC crude oil demand in almost every quarter before the end of 2022. Of the 18 expectations, only two have been raised, and the magnitude is small.

The increasing number of Covid-19 deaths in the United States has almost doubled in two weeks:

With the widespread spread of the delta strain, the seven-day average death toll of Covid-19 in the United States reached 645 on Friday, almost doubling in two weeks, the highest level since May. According to data compiled by Johns Hopkins University and Bloomberg, the average daily number of new infections during the same period increased by approximately 66%, exceeding 128,000 on Friday, returning to the level of early February.

Pelosi’s plan to withhold the infrastructure bill and wait for the budget has faced opposition from moderate Democrats:

Nine moderate Democrats in the House of Representatives jointly sent a letter to Speaker of the House Nancy Pelosi, threatening to withdraw support for the $3.5 trillion budget plan unless the bipartisan infrastructure bill is passed first. “It’s time to break ground and get people to work,” the Democrats wrote in a letter dated August 12. “We will not consider voting for the budget plan until the bipartisan “Infrastructure Investment and Employment Bill” is passed in the House of Representatives and signed into law.”

Canadian Prime Minister Justin Trudeau called for the national election on September 20 in an attempt to regain the majority of seats in Parliament:

Canadian Prime Minister Justin Trudeau called for a national election next month, hoping to take advantage of his Liberal Party’s current larger polling lead to regain a majority in parliament. Trudeau met with Canadian Governor Mary Simon in Ottawa on Sunday and demanded the dissolution of Parliament. Subsequently, Trudeau said at a television news conference that the election will be held on September 20. Opinion polls show that the Liberal Party, which has been in power since 2015, is currently hovering around 35%. In Canada’s dispersed political system, this ratio is close to the threshold required to regain parliamentary control.

The People’s Bank of China has reduced its volume and continued to make MLF and interest rates have remained stable. It has not signaled further easing to the market:

Facing the current environment where China’s economic momentum is weakening and inflation is heating up, the People’s Bank of China has reduced the volume of the medium-term lending facility (MLF) due this month and maintained its interest rate stability. After the RRR cut last month, it did not release further easing signals to the market. . The People’s Bank of China announced that, considering that financial institutions can use some of the liquidity released by the July cut in the deposit reserve ratio to return the MLF due in August and other factors, it carried out a 600 billion MLF operation today, and the interest rate remained stable at 2.95%. 700 billion MLF expires this month. The central bank also carried out a 7-day reverse repurchase operation of 10 billion yuan. The central bank stated that the operation fully meets the liquidity needs of financial institutions and maintains reasonable and sufficient liquidity.

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