G20: Treasury Secretary Lew claims victory on global fiscal stimulus - MUFG

Derek Halpenny, European Head of GMR at MUFG, suggests that another reason for bringing forward the timing of the next Fed rate increase to September is the improving outlook for global growth.

Key Quotes

“Speaking ahead of this weekend’s G20 gathering in China, US Treasury Secretary Lew claimed “real progress” in pushing for governments globally to help augment monetary easing through fiscal stimulus. Citing China, Japan, South Korea and Canada as countries implementing fiscal stimulus plans, he concluded that there had been a change in thinking. The UK and the US are set to follow with their own fiscal expansions.

Data today from China provided some evidence of the possible benefits to growth from an easier fiscal stance. The official PMI Manufacturing Index increased from 49.9 in July to 50.4 in August, the highest level since September 2014. Given the fallout in global financial markets led by China in January/February after the Fed’s first rate increase last December, the continued stability in China will no doubt also be an encouraging factor for the Fed when it meets later this month.”