— This is the script of CNBC's news report for China's CCTV on September 5, 2019, Thursday.
Let's have a look over the specific content over this beige book first, most U.S. businesses remain optimistic about recent economy prospects despite concerns about tariffs and trade policy, as the economy continues to grow, the beige book shows.
Specifically, U.S. employment rate and wage have a modest growth, consumer spending mixed, trade friction bring more challenges to agriculture, and dilemma faced by manufacturing industry is also confirmed in this beige book, which is a potential risk to recent U.S. economy growth. Aug PMI signals the first slowdown in manufacturing in 3 years, according to data released by ISM at previous day.
At the same day with beige book releasing, some fed officials also had their public comments, expressing their worries over rising trade friction.
Charles Evans, President of the Chicago fed, who values manufacturing, said tariff curbs the competitiveness, production and innovation of U.S. companies, and it is a main factors that drags down U.S. economy growth. Neel Kashkari, President of the Minnesota fed said at same day that rate cut is not a good tool to deal with the escalating trade friction though, it is the last-ditch action for the fed, if U.S. companies' investment continue to decline and economy recession warning still flash red.
In his view, the biggest concern is yield curve inversion, which has generally continued and deepened recently. Last week,
30-year treasury yield fell to its lowest level ever.
10-year treasury yield also declined to its 3-year low after weak manufacturing data released.
Greenspan, former fed chairman, also worried about the yield curve inversion, he expressed his concern over U.S. economy recession and warned that it is inevitable and it is only a matter of time before negative rates spread to the U.S., in terms of current international and home situations, said in an interview with CNBC Wednesday.
Alan Greenspan, Former Chair of the Fed
"You're seeing it pretty much throughout the world. It's only a matter of time before it's more in the United States,"
He thinks performance of U.S. stock market will determine whether the U.S. economy moves forward or falls into recession to a large extent, and reminds policymakers to take actions to that.
Alan Greenspan, Former Chair of the Fed
"Strangely enough, it's going to depend in large part on the stock market,"
"We underestimate the wealth effect on the economy and this type of volatile stock market moves, it has a neither impact which I don't think we fully understand nor measure correctly."
Before Greenspan took the interview, John Williams, President of the New York fed, also said low inflation is the problem of this era. These comments raise the probability that the fed will cut rates in September.
Related trading data shows, the market is pricing in a 100 chance that the fed will cut rates in September, 90% of that probability is cutting rates by 25 basis points, 10% is cutting 50 basis points.
The fed is going to publish its rates decision on Sep 18, we will keep a close eye on this issue.