US economic signals are not positive. Will Powell postpone tapering?
Since the last meeting of the FED there is nothing but talk of the beginning of the "Tapering", that is the end of the period of monetary expansion that the governor of the Fed Jerome Powell has hinted that it is about to happen. After all, the hawks have been aiming for some time now to reduce purchases of government bonds, perhaps with a greater concentration on mortgage-backed securities, in order to support the real estate markets.
New data, however, could change Powell's mind, because the economy is not fully showing that recovery hoped for by the FED:
The real estate market showed a 6.6% decline in new home sales. A very high value, which brings sales back to the hardest moments of the pandemic. We are also in the third consecutive month of decline in real estate sales.
As we have said, this level has not been seen since April 2020.
… And not because of the supply – c which, after the end of the lockdown, is once again abundant.
The problem is very simple: Buyers do not think it is profitable to buy a house now. Prices are seen as too high, so buyers simply evaporate.
Durable goods, cars and real estate have all seen rising prices at a time when average incomes have been squeezed due to the pandemic.So buyers are unable to afford the product economically and, as the University of Michigan convenience indicator, according to which the purchase conditions are considered unfavorable.
Inflationary expectations, which made the Fed think it was time to change monetary policy, may be far less realistic than previously thought. Wanting to support the market, purchases of MBS, mortgage-backed securities, but in this way perhaps a single problem can be solved, not all of them, also because several banks, including Goldman Sachs, indicate a decline in GDP growth expectations. In the end, in just over 24 hours, we will know if these latest non-positive data will change the FED board's mind or if this will continue in its intentions.
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The article US economic signals are not positive. Will Powell postpone tapering? comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/segnali-economici-usa-non-positivi-powell-rimandera-il-tapering/ on Tue, 27 Jul 2021 06:55:10 +0000.