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The state of the monetary union – vox
First, the difference in labour market performance between the US and the Eurozone is one of degree but not of kind. Second, the economic consequences of the sovereign debt crisis will be mostly gone by 2018, but the political crisis will continue. Third, enforcing fiscal rules via political arm twisting is a recipe for disaster. Market discipline must instead be brought back, but without financial fragmentation. Limited and conditional Eurobonds are the best way to do so.
France's economy minister calls for euro zone government with fiscal transfers – Reuters
Euro area: credit recovery is gaining traction – Pictet
Unchanged inflation reduces pressure on ECB – Danske Bank
Anders Borg: Why the Fed Should Postpone Rate Hikes – Project Syndicate
As central bankers from around the world gather this week in Jackson Hole for the Federal Reserve’s annual Economic Policy Symposium, one key topic of discussion will be the current global stock-market turmoil. But financial volatility is only one reason why the Fed should not raise interest rates this year.
Hawkish Rumblings – Tim Duy
The Fed doesn't want to take September off the table. Many officials had what they believed was a solid case for hiking rates at the next meeting, and they don't want market turmoil to undermine that case. And that case is not complicated. It's the Phillip curve combined with an estimate of full employment (an estimate of full employment that remains sticky despite the persistent downtrend in inflation). If they move in September, that's the story they will run with. They don't have another paradigm.
Max McKegg: September rate hike back on agenda – TF
The US dollar is now back in favour after a turbulent week. Its main saving grace was the revised GDP number along with Chinese authorities supporting the stock market and a rally in oil prices. However, little support is coming from the FOMC where most committee members are still to make up their mind about how to vote on September 17.
Does 25bp Make A Difference? – Tim Duy
The lack of consensus regarding the timing of the first hike tells me that we don't fully understand the Fed's reaction function and, importantly, their confidence in their estimates of the natural rate of unemployment. The timing of the first hike will thus define that reaction function and thus send an important signal about the Fed's overall policy intentions.
US Labour Market Monitor – Danske Bank
Tighter labour market but still waiting for inflation
How to Create a Chinese Economic Crisis in Three Easy Steps – David Beckworth
Paul Krugman: 1998 in 2015 – NYT
The extent to which China has managed to put itself into something like the situation many of its neighbors faced in the late 1990s.
The Unreliable Experts – Jim O'Shaughnessy
Getting in the way of outstanding performance
FX: mean reversion – Nordea
The message of the Jackson Hole is that they don't know, but optimism remains that inflation is on the way back. FX appreciation as a hurdle. Go with central bank bias or stay in the range.
Alberto Gallo: Central bank monetary arsenal is increasingly ineffective – FT
Structural forces limiting growth and inflation are not being addressed
Olivier Blanchard’s Greatest Hits – iMFdirect
To mark his departure, we’ve pulled together some of the most read and talked about of his blogs for iMFdirect over the years.
Blanchard: Looking Forward, Looking Back – IMF
IMF Chief Economist Blanchard to step down end September * Financial crisis raises potential existential crisis for macroeconomics * Need to address longer term issues of low productivity growth, increasing inequality
Market Reflections on One Crazy Week – WSJ
JPM: "Nothing Appears To Be Breaking" But "Something Happened" – ZH
Fed update: Wrap up on JH – Danske Bank
JH reveals spirit of the times – TF
Hawkish Fed talks tough, but ready to wait – TF
JH Post-Mortem: "Door Still Fully Open To September Lift Off" – ZH
Fischer Praises Economy, Straddles FOMC Liftoff Date Camps – BB
Fischer sees inflation rebound, allowing gradual rate hikes – Reuters
Carney: BoE stance on rates unchanged by China – Reuters
Jackson Hole Questions Inflation Mastery Sought by Draghi – BB
Constâncio: Understanding Inflation Dynamics and Monetary Policy – ECB
Raising inflation target won't help much now: researchers – Reuters
Morning MoneyBeat Asia – WSJ
A Wild Week for Capital Markets
Morning MoneyBeat Europe – WSJ
Stocks Drop as Turbulent Month Nears End
Morning MoneyBeat US – WSJ
Traders Look to Last Jobs Report before Fed Meeting
Danske Daily – Danske Bank
Euro rates update – Nordea
Eye-Opener – Nordea
Monster week ahead * Fed’s Fischer suggests Sep still on the table * Chinese equities down again * Collapsing inflation expectations send euro and US yields lower * EUR/USD took a breather, awaiting the coming week
Morning Markets – TF
Another week and another Chinese central bank policy about turn that sees it stop its $200 billion equity-buying spree has upended last week's tentative recovery and sent Asian bourses sharply lower. Markets also continue to digest the implications of this weekend's Jackson Hole central banker jamboree, and wonder whether the Fed was as hawkish as appearances suggested and if a September US rate hike is still on the cards.
Daily Comment – Marc Chandler
Markets Struggle to Stabilize
Daily Shot – TF
The Fed's September policy meeting will likely focus on the dollar's strength and inflation expectations, and not just the recent market selloff and China's woes.
Brussels Playbook – Politico
Agenda-setting — The Ex-Files — Immigration tour
US Open – ZH
China Dramatically Intervenes To Boost Stocks Despite Reports It Won't; US Futtures Slump On J-Hole
Frontrunning – ZH
FX Update – TF
The Jackson Hole symposium over the weekend saw mildly hawkish developments from the Fed and Bank of England, but these were glossed over as the currency traders still harbour concerns on the risk appetite front and look forward to a pivotal ECB meeting this Thursday.
From the Floor – TF
We still think it probably won't happen given global markets turmoil, but there is little doubt that there are some very itchy fingers in the Fed keen to begin the rate normalisation process next month.
Aamukatsaus – Nordea
Nollainflaatio palaa piinaamaan Draghia: euroalueen inflaatioluvut julkaistaan tänään * Brent-öljyn hinta nousi perjantaina 50 dollarin päälle * Ruotsin vähittäismyynti kasvoi heinäkuussa kovaa tahtia
Jan Hurri: Ministeri Stubb ajopuun peräsimessä – TalSa
Ministeri Stubb kehuu yhä euroa Suomen historian vakaimmaksi valuutaksi, vaikka tietää, että euro on yhä keskeneräinen ja epävakaa kokeilu. Senkin hän tietää, että kriisialtis rahaliitto on peruskorjauksen tarpeessa – mutta ei sitä, minkälaisen rahaliiton Suomi haluaa tai saa.