Weekly financial markets review

      
    
Weekly financial markets review
Aktualności / 2022-09-15 / autorzy: Piotr Minkina


Key information from the past week

1. Poland - another MPC rate hike
At its September meeting, the Monetary Policy Council decided to raise the NBP's benchmark rate by 25 basis points to 6.75%, which was in line with market consensus.

Source: GUS, NBP. Own compilation.

2. GDP in the Eurozone

In the second quarter of 2022, according to Eurostat estimates, the seasonally adjusted GDP increased by 0.8% in the eurozone and by 0.7% in the EU as a whole, compared to the previous quarter. In contrast, compared to the same quarter of the previous year, the seasonally adjusted GDP grew by 4.1% in the eurozone and 4.2 % in the EU in the second quarter of 2022, following growth of 5.4 % in the eurozone and 5.5 % in the EU recorded in the first quarter of 2022.

In the second quarter of 2022, household spending rose 1.3 % in the eurozone and 1.2 % in the EU. Final government expenditure rose 0.6 % in both the eurozone and the EU. Gross fixed capital formation rose 0.9 % in the eurozone and 0.7 % in the EU. Exports rose 1.3 % in the eurozone and 1.4 % in the EU and imports rose 1.8 % in the eurozone and 1.9 % in the EU. Household spending made a positive contribution to GDP growth in both the eurozone and the EU (0.6 percentage points in both economic areas). The contribution of government spending was also positive (0.1 percentage points in both areas). The contribution of gross fixed capital formation was also positive in both the eurozone and the EU (0.2 percentage points both). The contribution of the foreign trade balance was negative at -0.2 percentage points for both areas. The impact of changes in inventories was insignificant.

Source: Eurostat. Own compilation.

Source: Eurostat. Own compilation.

3. Germany - CPI inflation
The Federal Statistical Office (Statistisches Bundesamt) forecasts that Germany's inflation rate will be +7.9% in August 2022, with the July 2022 inflation rate at +7.5%. Based on the results available so far, the Federal Statistics Office also reports that consumer prices are expected to rise by 0.3% in July 2022 in m/m terms. The authority explains that energy prices have risen significantly since the start of the war in Ukraine and have had a significant impact on the high inflation rate. Energy prices were 35.6% higher in August 2022 than in August 2021. Food prices also rose above average (+16.6%). The pronounced increase in prices at earlier stages of the economic process affects current prices. Another factor driving up prices is the disruptions in supply chains caused by the Covid-19 pandemic. Extraordinary effects, such as the impact of the €9 ticket and fuel discounts, are included in the results. Based on interim results, the exact extent of these effects cannot yet be shown.

Source: Statistisches Bundesamt. Own compilation.

4. Germany – industrial production
Germany's industrial production level fell, year-on-year, by 1.1 % in July against expectations of around -2.0 %. On a month-on-month basis, production levels fell 0.3 % in July from June, with factory orders falling 13.6 % year-on-year and 1.1 % month-on-month.

5. Eurozone: PMI
PMI indicators for the service sector in Italy, France and Spain remain at levels indicative of the still prevailing economic climate. The overall indicators (Composite) only for Spain and France are above 50 pts. For Germany, all groups of indicators are at levels below 50 pts. The large share of the German economy in the Eurozone as a whole has resulted in indicators here, too, being below the level that determines prosperity.

Source: Bloomberg, S&P Global. Own compilation.

6. ECB - change in interest rate level
The European Central Bank raised its three key interest rates, the main refinancing operations rate and the central bank lending and deposit rate, by 75 basis points. As of 14 September 2022, they will be 1.25%, 1.50% and 0.75%, respectively.
In addition, principal repayments on maturing securities purchased under the APP program will be reinvested for as long as necessary to maintain strong liquidity conditions and an appropriate monetary policy stance. In the case of PEPP, reinvestment will take place until at least the end of 2024.

 

This week:

  • Poland: trade balance, CPI inflation in August (preliminary), budget execution, core inflation;
  • Eurozone: inflation (CPI), industrial production, ZEW, trade balance;
  • USA: CPI, PPI, retail sales, industrial production;
  • Japan: PPI, industrial production, industrial orders