Daily update
Daily update
- The market consequences of the US presidential debate rested on whether it changed probabilities around the election, and whether more substantial policy insights were offered. On the former, betting markets and the media suggest US Vice President Harris “won”—although debate victory does not always translate into electoral victory. On the latter, this was a debate of social media memes more than in-depth policy analysis.
- August US consumer price inflation is due. The first focus for investors is whether a moderation of consumer price inflation will change the Federal Reserve’s policy decision. The Fed is chasing inflation lower, and it is unnecessarily late to start the rate cut cycle, but there is probably not enough inflation weakness to prompt a larger rate cut.
- The second focus is whether US consumer spending power is enhanced by lower inflation (as wage growth remains OK). If inflation is falling because the fictitious owners’ equivalent rent is falling, there is no boost to consumer spending power. If other prices are falling (and some goods prices are well into deflation territory), that will help spending power.
- UK July monthly GDP was a little weaker than expected. The data is volatile, and not seen as especially significant for policy decisions.
