Daily update
Daily update
- Markets care about politics when policy probabilities change. So far, the US political circus has not changed many probabilities. The polling position of US Vice-President Harris has improved, but sentiment surveys (as low quality indicators of markets) are not significantly shifting probabilities. The prospect of an announcement about the Democrats’ vice-presidential nominee might matter. Vice-presidential nominees rarely change things much, but they can hint at policy direction—which investors care about.
- UK Chancellor Reeves is to speak to parliament, outlining the current fiscal position. The remarks have been selectively leaked, and are likely to stress the bad news. Because UK economic growth tends to be underestimated in real time, both tax revenues and debt ratios will probably improve. Stressing the bad news now will thus cast government policy in a more positive light later.
- The US Dallas Fed manufacturing sentiment poll is not, perhaps, much use as an economic indicator. Its comments section is a reminder of political polarization. Polarization has become worse over time, making it difficult to compare sentiment surveys today with sentiment surveys in the past.
- The UK issues credit data, ahead of a Bank of England meeting this week that may cut rates. The Federal Reserve and the Bank of Japan are also deciding policy this week.
