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US rates guru George Goncalves gives his take on what to expect ahead of the FOMC decision later today. His base case is that Powell will give markets enough to keep them waiting as they line things up for major policy moves to be announced in September.
For our academic summary this week Sam van de Schootbrugge reviews a new IMF paper showing that mobility rather than the timing of lockdown restrictions themselves drive economic activity, given individuals adjust behaviour ahead of formal restrictions. This has important policy implications as it implies an easing of lockdown measures are unlikely to be sufficient to trigger a return to normal levels of economic activity.
We also update our regular COVID tracker highlighting the ongoing spike in US COVID cases.
July FOMC Preview: The Setup For Dovish September Policy Moves? (4 min read) This past year feels like a blur for all the obvious reasons. But before the all-out blitzkrieg easing campaign that the Fed launched post March 2020 to help combat the fallout from the COVID-induced disruptions, it is worth mentioning that this time last year, at the July FOMC meeting, the Fed actually embarked on its first of the many so-called ‘insurance rate cuts’.
(George Goncalves │ 29th July, 2020)
Mobility, Not Lockdown Easing, Will Drive The Recovery (6 min read) The COVID-19 pandemic has dealt both health and economic blows. As new data emerges, many researchers aim to understand not only how severe the impact has been, but also how mitigating measures have influenced the outcomes.
(Sam van de Schootbrugge │ 29th July, 2020)
Global COVID-19 Tracker – Cases Rising In US, HK Concerned About Hospital Capacity (1 min read) The U.S. registered 61,700 new cases yesterday, a daily rise of 10%. The total count now stands at 4.35m, a rise of 1.4% since yesterday (see Table). The news comes as six states see record COVID-19 deaths and child hospitalisations rise in Florida.
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