Summary
United States: Fed Not on Summer Break Quite Yet
- This was a busy week for markets and monetary policymakers alike, as a healthy slate of economic data was accompanied by an FOMC meeting. On balance, the data were consistent with slowing inflation and output growth, but at a gradual rather than sudden pace.
- Next week: Housing Starts (Tue), Existing Home Sales (Thu), Leading Economic Index (Thu)
International: China’s Post-COVID Rebound Is Over, European Central Bank Remains Hawkish
- While the Chinese economy outperformed in Q1 after Zero-COVID measures were lifted, momentum from the first quarter has not been able to sustain itself and growth prospects are fading quickly. Elsewhere, European Central Bank policymakers lifted interest rates another 25 bps to the highest rate since the early 2000s. The message from ECB President Lagarde was quite clear. Inflation is still uncomfortably high, and more work needs to be done to bring it back to target.
- Next week: U.K. CPI (Wed), Brazilian Central Bank (Wed), Central Bank of Turkey (Thu)
Interest Rate Watch: FOMC Skips June, but Signals Hikes Not Done Yet
- As widely expected, the Federal Open Market Committee (FOMC) refrained from hiking rates at its policy meeting this week, which is the first time in 11 meetings that the committee left the fed funds rate unchanged. However, the decision to keep the fed funds rate unchanged was accompanied by signs that the FOMC is not done tightening policy yet.
Topic of the Week: Interstate-95 Collapse Brings Another Headache for Recovering Supply Chains
- On the morning of Monday, June 11, a vehicle fire broke out below an Interstate-95 overpass in Philadelphia. The blaze resulted in a partial collapse of a section of the East Coast’s primary north-south highway. While construction is under way to repair the damaged section, the disruption could lead to higher transportation costs in the region.
