Financial Markets Daily Report 28 agost 2020
Markets were mixed in yesterday's session as the Fed and its Chairman Jerome Powell announced a change to the longer-run goals and monetary policy strategy. Volatility rose and stocks declined moderately across AEs and EMs.
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- Markets were mixed in yesterday's session as the Fed and its Chairman Jerome Powell announced a change to the longer-run goals and monetary policy strategy. Volatility rose and stocks declined moderately across AEs and EMs.
- As it concluded a strategic review that had started in 2018, yesterday the Fed adjusted its long-run inflation goal to "inflation that averages 2% over time", implying that it will temporarily aim at inflation moderately above 2% after periods of persistent inflation shortfalls. Also, the Fed now emphasizes "maximum employment" as a broad-based and inclusive goal, and the labor market will be assessed in terms "shortfalls" from this goal (before: "deviations").
- In fixed-income markets, the U.S. sovereign yield curve steepened amid expectations that the Fed will tolerate periods of moderately higher inflation. Euro area sovereign yields and FX markets were little changed.
- The second estimate of U.S. Q2 GDP figures showed that activity had collapsed by -9.1% qoq (flash estimate: -9.5%).