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Daily Market Outlook By PYX Markets
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[QUOTE="PYX Markets London, post: 108442, member: 38730"] [b]Daily Market Outlook 25 August[/b] [img]https://scontent-amt2-1.xx.fbcdn.net/v/t1.0-9/13938553_118457278597764_4706199327588223406_n.jpg?oh=4cb4000aa052d5b9cf8c6e211c4ac665&oe=581DD5BC[/img] While markets wait for Janet Yellen's latest message about the direction of monetary policy, the Federal Reserve chief and her colleagues already have one for politicians: the U.S. economy needs more public spending to shift into higher gear. In the past few weeks, Yellen and three of the Fed's other four Washington-based governors have called in speeches and Congressional hearings for government infrastructure spending and other efforts to counter weak growth, sagging productivity improvements, and lagging business investment. The fifth member has supported the idea in the past. The Fed has no direct influence over fiscal policy and its officials traditionally refrain from discussing it in detail. Having its top officials - from Yellen to former investment banker and Bush administration official Jerome Powell - speak in one voice sends a strong signal to the next president and Congress about the limits they face in setting monetary policy and what is needed to improve the economy's prospects. The Fed's annual conference in Jackson Hole, Wyoming, where Yellen speaks on Friday, is due to focus on how to improve central banks' "toolkit," but the unanimous message from the Fed's top policymakers is that those tools are not enough. "Monetary policy is not well equipped to address long-term issues like the slowdown in productivity growth," Fed vice chair Stanley Fischer said on Sunday. He said it was up to the administration to invest more in infrastructure and education. As a share of gross domestic product, U.S. annual business investment since 2008 has averaged nearly a full percentage point below the previous decade's average, government data shows. Little suggests a rebound any time soon. Fixed business investment has fallen in three successive quarters as a share of GDP. Researchers and analysts blame the slide on everything from doubts about future economic growth to distortions caused by Fed policy itself in helping boost the value of financial assets. The Jackson Hole conference will likely take stock of several unconventional solutions proposed as a way of breaking out of the cycle of subdued demand, weak investment and low growth that has followed the 2007-2009 recession. The dollar was range-bound in illiquid Asian trade on Thursday as major currencies continued to tread water ahead of the global central bankers' gathering in Jackson Hole, Wyoming, at which Federal Reserve Chair Janet Yellen may offer new clues on U.S. monetary policy. Fed officials including Vice Chairman Stanley Fischer and New York Fed President William Dudley have recently prompted some investors to raise their bets that the Fed is poised to hike rates again sooner rather than later, and some predict Yellen to echo their signals. Futures markets on Wednesday were indicating an 18 percent chance the U.S. central bank would hike rates at its policy meeting next month, and a roughly 50 percent chance of a rate increase in December, according to CME Group's FedWatch tool. Also weighing on the yen were growing expectations that the Bank of Japan will decide to take additional stimulus steps at its next meeting in September, when it will review its policies against a backdrop of growing doubt that the BOJ's target of 2 percent inflation target is within reach. Japan's government kept its assessment of the economy unchanged in August but offered a slightly more downbeat view on consumer inflation than last month, as prices slid on weak household spending and the strong yen pushed down import costs. The Cabinet Office said in its monthly report for August that consumer prices were flat - a gloomier view than last month when price rises were slowing. A Reuters poll on Thursday showed that a majority of economists expects the Bank of Japan will ease policy further next month, though about 40 percent of analysts surveyed said they expected the central bank to keep monetary policy unchanged. Crude prices dipped on Thursday as brimming U.S. and Asian fuel inventories returned investor attention to a large global supply overhang, cutting short a price-rally and restricting Brent crude futures to below the $50 a barrel mark. Traders said price falls this week had truncated a rally that pushed crude up by more than 20 percent earlier in August on talk of a potential deal by oil producers to freeze output in an effort to rein in oversupply. Hopes of a deal were dampened by record output from the (OPEC) and little prospect of voluntary restrictions. "Brent also came under pressure after (OPEC-member) Iraq said it still isn't producing as much oil as it should be, raising concerns that OPEC supply will continue to increase," ANZ bank said on Thursday. With output high, not just from OPEC but also other top producers like Russia, and the demand outlook shaky, analysts said there was little prospect of an end to the glut, which has pulled down crude prices from over $100 a barrel to their current sub-$50 levels since 2014. Analysts said that high storage levels pointed to an ongoing supply overhang that was weighing on markets. In the United states, commercial crude oil stocks rose by 2.5 million barrels to 523.6 million barrels C-STK-T-EIA. In refined products, stocks around the world are also brimming as demand slows while refinery output remains high. China's implied oil demand fell 0.3 percent from a year earlier to 10.58 mn bpd in July, according to Reuters calculations using official data. [/QUOTE]
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