Daily update
Daily update
- Equity markets had one of their funny turns yesterday. Some commentators, searching for scapegoats, want to blame the US ISM manufacturing sentiment poll. This seems unfair, as the ISM sentiment poll does not know what it is doing. Despite sentiment signaling five months of contraction, US manufacturing output is above where it was at the start of the year.
- Do these sort of financial market moves matter in the real world? Wealth effects are not as large as the headlines might suggest. Wealth effects aside, central banks only need to be concerned if markets become disorderly and threaten financial stability (per the UK’s Truss debacle, for instance), or if markets are reflecting a change in economic fundamentals. Neither seems to be the case at the moment.
- US data dominate the calendar. The JOLTs job openings data is expected to decline, reflecting reduced churn in labor markets. It will still be above pre-pandemic levels, reflecting a structural shift in recruiting (the lower cost of advertising jobs allows companies to “fish” for staff without necessarily having openings).
- US July factory orders data are expected to bounce back from a weaker June figure. US trade data rarely excites—surprising given the rise of economic nationalism and tariffs being imposed on US consumers.
