2026-08-29 Saturday

He acknowledged the Fed's responsibility for 65 months of elevated inflation, with PCE inflation at 3.7% year-over-year and 4.1% on a six-month annualized basis, while unemployment sits at 4.1%. Warsh's shift away from forward guidance signals a more data-dependent Fed, potentially increasing market volatility as investors lose the central bank's explicit rate path, while his emphasis on productivity and AI could reshape the Fed's policy framework.

The PBOC and NFRA jointly issued new rules on real estate credit, establishing a main bank system for development loans and extending loan terms. Development loans for pre-sale projects can now run up to 5 years, while completed sales and commercial real estate projects can reach 7 years. This policy shift aims to support the property sector, potentially boosting mortgage demand and stabilizing the housing market, with implications for bank credit risk and bond yields.

At Jackson Hole, BIS General Manager Pablo Hernández de Cos argued that stablecoins in their current form fail to uphold money's foundational properties—singleness, interoperability, and integrity—due to fragmentation and pseudonymity, while tokenised deposits preserve the two-tier system and offer a more promising path. ECB's Isabel Schnabel countered that central banks should issue tokenized reserves on-chain, as stablecoins cannot elastically expand liquidity, citing projects like Appia and Pontes. The divergence highlights a key policy debate: whether to accommodate private stablecoins or shift to central bank digital infrastructure. For bond markets, widespread stablecoin adoption could raise bank funding costs and reduce demand for government bills, as reserves held in short-dated bills would be sold, while tokenised deposits could shorten deposit durations and increase demand for high-quality liquid assets.

Energy prices fell −2%, dragging headline, but the sustained rise in services and food costs suggests underlying inflation is firming. This strengthens the case for the BOJ to continue normalizing monetary policy, potentially supporting the yen and pressuring JGB yields higher as markets price in further rate hikes.

This marks a deviation from the prior stability and could signal a softening labor market, potentially easing wage pressures and affecting the ECB's policy path.

Gains are driven by AI infrastructure suppliers TSMC, SK Hynix, and Samsung. The data, from Danmarks Nationalbank, is buried in its portfolio statistics; the next quarterly release will show whether the concentration persists.

The WTO Dispute Settlement Body adopted the panel report in DS622, finding the EU's anti-dumping duties on Indonesian fatty acid exceeded the dumping margin because the EU failed to use the exchange rate on the date of sale when converting euro transactions. Indonesia welcomed the ruling; the EU disagreed with the narrow issue and has 30 days to state implementation intentions. The report, adopted without public attention, could force the EU to recalculate duties; the EU's implementation notice within 30 days will settle the impact.

The EIA data, tucked in its annual uranium report, signals rising domestic supply; the next EIA quarterly update will show if the price trend holds.

The Bank of England paper develops a replicable framework that combines high-frequency administrative and survey microdata with a pre-registered shift-share design to estimate multi-margin firm responses to economic shocks in real time. Applied to the 2021–23 UK energy price shock, it finds energy-intensive firms pass on cost increases, build cash reserves, and shift towards homeworking. The authors report little evidence of aggregate employment losses or firm exits. The resulting coefficient vectors are read as first-order perturbations of firms' optimal-response functions, which is what lets the estimates stand in for behavioural parameters without a fully specified structural model.

The design is pre-registered, which protects the exercise from specification search when the data arrive in real time. Combining administrative and survey microdata lets the authors track the same firms along several margins at once, so adjustment patterns are directly comparable. The responses are highly heterogeneous across firms, and the distribution matters for how the shock propagates. One caveat is that the perturbation interpretation brackets the analysis to shocks that are not too large relative to the firms' current optimum, and the shift-share identification rests on the exogeneity of the exposure shares.

For public finance, the practical payoff is a real-time calibration tool for energy support schemes and environmental taxes. The split between cost pass-through, cash hoarding, and homeworking determines how much of an energy price shock lands on consumers, on wages, or on fiscal accounts through compensation. A carbon price is an energy price shock by another name, so the framework tells policymakers which margins will adjust first. The lack of aggregate employment losses in the 2021–23 episode points to adjustment through prices and balance sheets rather than headcount, which keeps the fiscal cost concentrated in price-linked support rather than unemployment benefits. As the next energy or commodity shock hits, the same template can produce estimates while the shock is still unfolding, rather than months later.

The Foreign Exchange Subcommittee reviewed IMF scenarios that put global growth at 3.1% in 2026 and 3.2% in 2027, with inflation at 4.4% and 3.7% respectively. The IMF's severe scenario, where rare earth substitution fails, implies a GDP downside of 1.75% of GDP for Japan and 1.5% of GDP for the US. This quantifies a direct hit to Japan's fiscal revenues and could weigh on JGB demand if investors price in weaker growth.

The World Bank's IDA has secured $70m for a Pacific payment system, and defense equipment accounts for about 1% of Japan's imports.

Committee members questioned the IMF's extreme elasticity assumptions, noting reality likely lies in between. The G7's ability to influence China was also doubted. The cost-recovery principle for the Pacific payment system may deter usage, and disclosure of recommendations could be limited. Attaching documents at the notification stage may overburden investors, suggesting a risk-based approach is needed.

The inward investment target, if met, would boost capital inflows and support demand for yen assets, partially offsetting the shock.

The Central Bank of Armenia has cut its policy rate in four consecutive steps, from 9.75% in September 2025 to 8.25% after the June 2026 decision, with intermediate reductions to 9.25% in December 2025 and 8.75% in March 2026. The cumulative easing of roughly one and a half percentage points reflects a deliberate gradual approach rather than a single aggressive move. However, the easing path is now colliding with rising underlying price pressures: normal inflation, the central bank's preferred core measure, reached 4.9% in June 2026, up from 3.5% a year earlier and above the central bank's target. The report attributes the overshoot to food and service prices, which have proven stickier than the headline trend suggested.

The monetary policy program for Q3 2025–Q2 2026 is based on official statistics from the central bank and the National Statistical Service, analyzing consumer price index components alongside each rate decision. The report shows that the central bank front-loaded cuts when inflation was benign, then slowed the pace as underlying inflation climbed. The gap between the policy rate and core inflation has narrowed, leaving less room for further easing without risking a de-anchoring of expectations. If the June reading persists, the board may pause or even reverse course, which would lift short-term government bond yields and raise the cost of fiscal financing for Armenia's public debt.

For investors in Armenian government paper, the key mechanism is the policy rate's direct pass-through to short-term yields. With the rate now at 8.25% and core inflation at 4.9%, the real policy rate has turned negative, a condition that typically pressures the dram and complicates the central bank's inflation fight. The report offers no explicit forward guidance, but the trajectory of underlying inflation will determine whether the easing cycle resumes or stalls.