HIGHLIGHTS OF THE WEEK

Economists' insight: The Fed steals Donald Trump’s thunder

Economist insights: The confidence of US purchasing managers and the employment report remain upbeat, the Italian public deficit should be revised higher, and Swiss GDP growth remained strong in Q2 (p.2)

›       In the United States, the employment report was encouraging, and ISM surveys point to a rise in new orders and production. These indicators should underpin the Fed’s intention to raise its key rate to 2.25% on 26 September

›       In Italy, new budget projections should include a rise in the public deficit in 2019. A downgrade of the rating of Italian public debt could imply a contained increase in sovereign rates

›       In Switzerland, quarter-on-quarter GDP growth came out at 0.7% in Q2 2018 and has remained above its long-term average over the past five quarters

Focus: The Chinese central bank has confirmed its intention to support growth (p.6)

›       The 50bp reduction, on 24 June, in the reserve requirement ratio applied to banks showed that the Chinese central bank (PBoC) intends to support the economy and limit the slowdown in GDP growth

›       According to our analysis, the PBoC not only has the necessary tools and room for manoeuvre to successfully initiate a reacceleration in bank credit to the economy…

›       … but also the prudential means that should enable it to prevent this stimulus policy from resulting in a further depreciation of the yuan against the dollar, which it seems to consider undesirable

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