Summary
United States: Service Sector Continues to Support Growth
- During August, the ISM Services Index bested consensus expectations and rose to 54.5, hitting the highest reading since February. The monthly upturn highlights ongoing strength in the service sector and overall resilience of U.S. economic growth despite higher interest rates. An uptick in the prices paid component of ISM services index as well as this week’s leg-up in oil prices are reminders of the obstacles ahead to fully tamp down inflation.
- Next week: CPI (Wed), Retail Sales (Thu), Industrial Production (Fri)
International: China’s Economic Free Fall Continues
- This week, new data revealed China’s economic slowdown is still in effect and a bottom has yet to be reached. China’s August Caixin PMI indices showed a more robust deceleration in the services sector than expected. Service sector problems reflect Chinese households’ unwillingness to spend and a preference to save, which not even the lifting of Zero-COVID policies has been able to alter.
- Next week: Brazil CPI (Tue), Argentina CPI (Thu), ECB Decision (Thu)
Interest Rate Watch: If the Fed Is Done, How Long Will We Be on Hold?
- Comments this week from N.Y. Fed President Williams suggested monetary policy is in a “good place” and Chicago Fed President Goolsbee said the Fed was “rapidly approaching the time when our argument is not going to be about how high should the rates go.” These remarks are tacitly signaling the end of the tightening cycle. If that is indeed the case, we explore how the length of time the Fed stays on hold could be consequential.
Credit Market Insights: Fed’s Beige Book Reveals Continued Uncertainty on the Outlook
- This week, the Federal Reserve released its September Beige Book, covering economic conditions across the country for the months of July and August. For the most part, economic growth was steady and generally unchanged from the previous period.
Topic of the Week: US Open Highlights Consumers’ Hunger for Experiences
- Tennis fans have been converging on Queens, New York to catch the U.S. Open. Resale prices for tickets are higher than ever, but consumers appear more willing to pay up to witness this event.
