Anchor resume from 8 to 15 of September 2017

Anchor resume from 8 to 15 of September 2017

Ana Martínez

The English Central Bank kept the benchmark interest rate unchanged at +0,25%, meeting market expectations. It was also decided to continue with the asset purchase program of GBP 435.000 million.

Although inflation in the English country increased by +2,9% (the annualized data) favored by the depreciation of the pound, there were no changes in the previous monetary policy mainly due to the uncertainty that generates the consequences that the Brexit might have. It should be noted, however, that the BOE’s speech had a hawkish tone (posture related to more restrictive monetary policies), after announcing the possibility of initiating a stimulus withdrawal in the coming months anticipating higher inflation rates.

As a result, the pound rebounded against the euro and the dollar during the last two trading days of the week and the government bond IRR advanced a +7,69% anticipating interest rate rises.

Throughout the week we have important references in the US region, especially after the update of the consumer price index. The latest data for August surprised the market rebounding a +0,4% (+1,90% annualized rate) compared to the +0,3% expected (+1,80% annualized). This rebound was mainly due to the increase in the price of oil after the hurricanes, which led the market to discount with a probability of +46,7% a rate rise during the next meeting of December.

We also had data referring to the labor market which continue to show strength, after reducing to 284.000 the weekly requests for unemployment benefits. Even so, we could expect that in the next updates a deterioration will be shown as a result of the stop in the economy with the passage of Hurricanes Harvey and Irma, a fact that led Goldman Sachs to reduce growth forecasts to +2 % for the Q3 (from the +2,8% estimated).

Somewhat quieter sessions in the Eurozone. No progress was made in the discussion with the UK on the conditions of Brexit. Junker (President of the European Commission) insisted on the negative effect that his exit from the EU would have on the English economy, urging to increase the integration of the member countries.

The evolution of the region continued to show signs of improvement, especially after the recent rise in the labor cost index (+1,8% compared to the previous figure of +1,4%). Such rebound has been positive and could have direct implications on inflation, so we could expect further increases in price levels.

In Asia the focus was set on the upgrading retail sales and industrial production. Both data resulted below expected levels, which could be a sign of slowing growth. While retail sales expected a growth of +10,5%, the rate reached was +10.1%, in terms of industrial production, rates stood at +6% in contrast to expectations of +6,6%. The comments did not wait, there are investors that expect a sudden slowdown in growth in the region.

During the next few days, we will continue to face tensions with North Korea after the launch of threats in which it was assured "to sink Japan and reduce to ashes and darkness the US" in response to the support shown by those countries to the sanctions imposed by the ONU, as well as by the trial with a ballistic missile that flew over Japanese territory during the night of Thursday.

As we pointed out earlier, in the commodity market the greatest beneficiary was the crude. It recovered levels of 50 USD the barrel of Brent, ending on Friday trading around the 55 USD/Brent, boosted by the upward revision of global demand and the halt in the production of the commodity after the hurricanes.

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