Viewpoint : The German election on Sunday 26 September will deliver a fragmented political picture.
Weekly Economic Monitor – 24 September 2021
Intesa Sanpaolo – Research Department
The race for the Chancellorship is between Armin Laschet, leader of the CDU/CSU Christian Democrats, and Olaf Scholz, leader of the SPD Social Democrats, currently in the lead in the voting intention polls.
FOMC: reversal time. The September meeting set the stage for a prompt start to the tapering process, possibly as soon as in November, and signalled a likely rate hike already in 2022, with an upward shift of the dot plot across maturities. The Committee seems concerned about supply-side bottlenecks, in the presence of persistently strong demand, with a fallout on prices that may prove more lasting than expected. The message is that monetary stimulus must be reduced in an extended phase of excess demand.
The week’s market movers
In the Euro area, focus will be on the initial estimates of consumer prices in September, that should point to higher inflation in Germany, France, Italy and in the euro area as a whole, still driven by the rise of energy prices. European Commission sentiment surveys for September should confirm that the recovery is entering a deceleration phase, whereas in France the INSEE survey could report an improvement in consumer confidence. Data on the labour market should outline a stabilisation of the unemployment rate in Italy and in the Eurozone in August, and an increase in Germany in September. In France, the consumption of goods should turn positive in July.
This week, several important data releases are lined up in the United States . September data will include the manufacturing ISM, that should confirm growth in the sector, with headwinds and upside price pressures due to supply-side bottlenecks; consumer confidence survey indices are expected to stay at compressed levels due to concerns tied to the rise of inflation. As regards August data, orders of durable goods are expected to grow overall and in the transportation sector, with favourable signals for fixed investment in 3Q 2021. Personal spending is estimated to have increased at a solid pace in August, albeit with downward revisions of the readings for previous months, and personal income should be up modestly. On the inflation front, the core deflator trend is forecast to slow down again, on indications of a partial easing of inflation pressures.
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