By Peter Nurse and Ana Beatriz Bartolo
Investing.com – The Fed is more likely to wait until November to formally announce a reduction in its bond-buying program, according to Goldman Sachs. Democrats push forward with their progressive spending plans, while German companies worry about supply bottlenecks.
In Brazil, the president of the Central Bank Roberto Campos Neto addressed monetary policy in a presentation during an online event at XP Investimentos.
Here’s what you need to know about the financial markets on Wednesday, August 25th.
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1. Goldman sees greater chance of tapering from November
The Federal Reserve’s annual meeting in Wyoming has been on investors’ radar for some time, but with changing perspectives on the event.
A speech by the influential Fed policymaker, late last week, led to risk-taking after he suggested the rise in Covid-19 cases in the country, largely due to the highly transmissible delta variant, which it could persuade him to vote for a postponement of the beginning of the end of the central bank’s massive bond-buying program.
Prior to that, the widely held belief in the market was that the improvement in and high levels of inflation would lead the Fed to announce a deadline shortening schedule at this meeting. Goldman Sachs said on Wednesday that it has increased the odds that a formal announcement of a reduction will occur in November, from an earlier forecast of 25% to 45%, and reduced the chance in December from 55% to 35%.
On the fiscal front, the president’s ambitious domestic agenda took a step forward on Tuesday after the US House of Representatives approved a $3.5 trillion budget structure. Progressives within the Democratic Party plan to spend trillions of dollars on various social programs, but they struggle to get those proposals through Congress since the party has a tiny majority.
Republicans vehemently oppose the plans, citing the cost and the country’s precarious financial situation. But passing the framework should allow Democratic lawmakers to begin filling in the details of a comprehensive package that would increase spending on day care, education and other social programs and raise taxes on the wealthy and businesses.
CHECK: Quotation of the main global indices
2. Campos Neto addresses inflation and fiscal risk in an event
The president of the Central Bank, Roberto Campos Neto, evaluated, at the Expert XP event, that inflation is “obviously a concern”, even more so when the market expectation of 3.93% for 2022 is higher than the monetary authority’s forecast of 3.50%.
Campos Neto highlights that the rise in purchase and rent prices in the real estate market, as well as the water crisis and the bottleneck in the semiconductor sector, should pressure inflation.
Another point of attention would be the “”, with the high demand for materials used in clean and sustainable technologies.
Even so, the BC president claims that the monetary authority has the necessary instruments to control the rise in prices and that the credit market in the country is healthy.
The country’s fiscal situation is also “undeniably better”, according to Campos Neto. In a presentation, he pointed out that the perspective for the gross debt is that it will be 82.1% of the Gross Domestic Product () in 2021, according to the Focus bulletin. This result is lower than expected in November last year, when the expectation was that the indicator would reach 95.8% of GDP.
CHECK: Brazilian stock quote
3. Stable NY futures; Salesforce.com balance sheet
US equities are expected to open steady, struggling to reach record levels, as investors await the start of the major Federal Reserve symposium later in the week (see above).
At 8:34 am, , and had a slight drop of 0.01%, 0.06% and 0.09%, respectively. The (NYSE:), ETF that measures the performance of Brazilian stocks in New York, had a slight increase of 0.06%.
It closed up 0.2% on Tuesday, its fourth consecutive positive session and a new closing high. The index rose 0.5%, also reaching a record, while the index advanced 0.1%.
The quarterly balance sheet season is coming to an end and has been successful in helping to support the market in general. Earlier this week, 476 of the companies in the S&P 500 had already released results and, of these, 87.4% surpassed the consensus, according to data from Refinitiv.
There are still a few companies that publish reports on Wednesday, including Salesforce.com (NYSE:) (SA:), one of the latest big tech companies to report results, cloud data storage company Snowflake (NYSE:) and cosmetics and beauty retailer Ulta Beauty (NASDAQ:) (SA:).
CHECK: US stock quote in the pre-market
4. German companies concerned about supply problems
German manufacturers, often Europe’s main economic driver, are increasingly concerned that a shrinking global supply and rising infections at Covid will hamper the region’s economic recovery.
The Ifo Institute’s influential fell to 99.4 in August from 100.7 in July, falling for the second month in a row.
“Bottlenecks in the supply of intermediate products in manufacturing and concerns about rising infections are putting pressure on the economy,” Ifo President Clemens Fuest said in a statement.
Illustrating this, German exports to China, the country’s second-largest sales market outside the European Union, declined 3.9% from a year earlier, the first drop since August 2020, according to data released Wednesday .
However, not all the news is bad, as European Central Bank vice president, , said on Wednesday that the central bank could revise its macroeconomic forecasts for the euro zone in September, following recent solid activity indicators. in the third trimester.
5. Oil with slight high
Oil prices were up slightly after starting the day in decline on Wednesday. Signs that demand in the US, the world’s biggest consumer of crude oil, are driving prices up, but the spread of the Covid-19 delta variant holds the price.
At 8:41 am ET, futures contracts were up 0.27% at $67.72 a barrel, while futures were up 0.3% at $70.62 a barrel.
CHECK: Quotation of the main global commodities
Both contracts were about 8% above the previous two days, helped by the loss of more than 400,000 barrels a day of supply in Mexico after a fire on an oil rig.
Industry group data, released on Tuesday, showed that oil inventories dropped 1.6 million barrels in the week ending Aug. 20, while oil inventories fell 1 million barrels.
Official data from the US (EIA) will be released on Wednesday.