Daily update
Daily update
- US consumer price inflation details continue to suggest that US rate cuts are overdue. Harmonized inflation slowed again (to 1.85% y/y). Durable goods prices are falling at the most aggressive rate in two decades. Most sectors experience deflation somewhere in the US. Investors should remember that the slowing of the fantasy owners’ equivalent rent has no direct effect on consumer spending power.
- US producer price inflation is due today—free from a lot of the fantasy pricing, and a better reflection of corporate pricing power. Remember that less than half the price a consumer pays reflects the price of a good at the factory gate, so the direct relationship to consumer prices is limited. Auto insurance is worth looking at—the producer price measure is used to calculate the PCE deflator, and auto insurance is a lot lower on this metric than in consumer prices.
- Assorted final Eurozone consumer price figures, and German wholesale prices (still in deflation) are unlikely to excite markets. Swedish inflation came in lower than any economist forecast.
- China’s June imports were weak, keeping alive questions about domestic demand. Exports were stronger—though the anomaly of US trade persists. China’s exports to the US are almost 16% higher than US imports from China.
