Federal Reserve minutes to show a committee that’s sticking to the plan
August’s Fed meeting made it pretty clear that the committee intends to stick to its plan and hike a further two times this year. But with global risks building, we think there are two things to watch from Wednesday’s Fed minutes.
Firstly, look out for any anecdotal comments surrounding the impact of trade tensions on firms. While some companies may be beginning to feel the strain, we suspect the majority Fed view is that the strong economic backdrop and tax cut tailwind will continue to outweigh the trade war risk – at least for now.
Secondly, watch out for any comments on the challenges facing emerging markets. Again, while several EM economies are feeling the effect of the stronger dollar and higher US borrowing costs, comments from Fed Chair Jay Powell and other officials suggest their focus is still centred firmly on the domestic outlook. At this stage, we doubt emerging market woes will prompt the Fed to change course and we still expect a further two rate hikes this year.
In addition, the Fed’s annual economic policy symposium in Jackson Hole takes place the 23-25th of August. Details of the programme are yet to be released, but the speeches at Jackson Hole may yield some insight into policy-makers' latest thinking.
Norwegian economy is set to improve further
It’s another quiet summer week in Scandinavia. The highlight is Norway’s 2Q GDP figures on Thursday, which we expect will show how the Norwegian economy continues to improve (QoQ growth rising to 0.7% from 0.6% in 1Q).