As the coronavirus pandemic spread in the US, especially in the southern states, in a second wave and closing economies in the region, Federal Reserve Chairman Jay Powell and Treasury Secretary Steven Mnuchin will testify to Congress on Tuesday.

Powell and Mnuchin at Congress

The duo will appear Democratic-controlled House of Representatives Financial Services Committee at 12:30 on the eastern time, expecting to face the difficult questions from the lawmakers.

With the support of the Treasury, the US central bank launched programs to improve the credit flow to eliminate the collapse of economic activities, including the new Main Street Lending Program for medium-sized businesses.

The Treasury has undertaken the execution of the $ 660 billion forgivable loans Payroll Protection Program (PPP), which aims to keep small businesses afloat and keep their employees on payrolls.

Publishing his written statement to Congress on Monday, Powell noted that economic recovery began earlier than expected, but production and employment were well below pre-crisis levels. Powell reiterated that a complete economic recovery is unlikely until people go out and feel safe in doing so.

Goodbye, Hong Kong

The Chinese Parliament adopted a new national security law for Hong Kong on Tuesday, threatening the characteristics of the autonomous city-state, such as freedom of expression, freedom of the press, and an independent judiciary.

Communist China has not yet shared with the public the details of the law, which claims to combat terrorism, separatism, and secret agreements with foreign powers.

The fears that the law will destroy the freedoms of the global financial center have led to strong opposition from the UK, Hong Kong’s former colonial power, EU, Australia, Canada, New Zealand, and the US.

“It marks the end of Hong Kong that the world knew before,” a prominent pro-democracy activist in Hong Kong, Joshua Wong wrote on Twitter.

The United States, already at loggerheads with China due to many issues such as trade, Beijing’s claims to large portions of South China Sea, the oppression and forced sinification of the Uighur people, and coronavirus, started to eliminate Hong Kong’s special status under the US law, stop defense exports and restrict technology access.

The Chinese Foreign Ministry said it would retaliate against the United States.

Chinese Manufacturing

Factory activity in China expanded at a stronger pace in June after the government largely removed socio-economic lockdowns and increased investments, but the continued weakness in export orders suggests that the effect of the global coronavirus crisis will likely continue for a long time.

The official Manufacturing Purchasing Managers Index (PMI) released by the National Statistics Bureau on Tuesday came in at 50.9 in June, compared to the 50.6 figure in May. Economist estimates were in the line with a 50.4 median figure.

However, although the export orders were better compared to the 35.3 level in May, they were still at the level of 42.6, well below the 50 point level.

Euro inflation

Eurozone inflation rose unexpectedly in June.

Annual inflation in 19 countries sharing the euro rose from the lowest level of four years in May to 0.1% in June to 0.3%. This was past estimates that there would be no change.

Excluding variable food and energy prices, an important measure followed by the ECB, inflation ranged from 1.2% to 1.1%, and a narrower indicator excluding alcohol and tobacco fell from 0.9% to 0.8%.


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