Daily update
Daily update
- We have US June consumer price inflation data. Federal Reserve Chair Powell thinks this matters, because politicians think this matters, and Powell thinks politicians are important. Economists, who are actually important, tend to regard headline US consumer price data as a rather poor quality statistic.
- The details offer insight. Excluding the fantasy owners’ equivalent rent gives a better idea of middle class US households’ spending power. Focusing on the real world, genuine service prices give some sense of cost pressures. Durable goods price deflation (prices are 5.3% below their highs) has been more pronounced. Regional data, showing almost every sector in deflation somewhere in the US, argues strongly against inflation stickiness.
- The UK’s May monthly GDP data was quite strong, but is also not really market moving. The numbers are too unreliable to be seen as changing Bank of England policy—and something as simple as better weather can have an impact on monthly numbers.
- Politicians are politicking. Markets ignore this because markets do not care much about politicians. The debate over US President Biden’s re-election bid is only likely to matter if probabilities around election outcomes and policies shift meaningfully. French President Macron tried being presidential and called for a broad “governing pact.” Markets are skeptical.
