November 22, 2022
United States:
Fed Hawkishness Peaks as Rising Debt Payments Erode Savings
Tighter Federal Reserve policy is raising households’ interest-rate burden, leading to a rapid decline in excess savings and underscoring the likelihood hawkishness has peaked.
The pandemic rise in excess savings was probably the most rapid increase in wealth ever seen. A combination of a collapse in demand and huge government transfers led to an estimated peak of $2.3 trillion in excess savings being accumulated by the middle of 2021.
Europe:
EU Shapes Final Gas Price Cap Plan to Avoid Abnormal Spikes
The European Union’s executive is designing an emergency natural gas price cap in an effort to avoid the kind of record highs seen in August without risking the security of supplies to the region.
The European Commission is due to discuss the final shape of its so-called market correction mechanism at a meeting on Tuesday in Strasbourg. In a regulation to be proposed to member states, it plans to say that price spikes involve tangible damages and risks for customers, suppliers and security of supply in gas and electricity markets, according to a draft seen by Bloomberg News.
Asia:
Hong Kong Dollar Rises Toward Strong Half of Band as Short Sellers Bail
The resurgent Hong Kong dollar has pushed closer to the strong half of its trading band, amid a spike in local funding costs that has upended crowded bets on shorting the currency.
The Hong Kong dollar saw its biggest intraday rise in three years on Monday to as high as 7.8004 per dollar, bringing its gain for November to 0.6%. That puts it on track for the best month in two decades and is the closest the currency has been to the mid-point of its 7.75 to 7.85 trading band since February.
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