Daily update
Daily update
- Two Federal Reserve speakers signalled that interest rate cuts are coming (the tone is consistent with a September rate cut). The Federal Reserve’s Beige Book of economic anecdotes strongly suggests that profit-led inflation is in full retreat (retailers are discounting to buy back customer loyalty, and customer price sensitivity is high). Growth and employment also appear to be moderating. The ECB meets today, giving Lagarde an opportunity to speak—no rate cut is expected now, but the quarter-point-a-quarter rhythm is looked for.
- UK labor market data showed a decline in unemployment and some positive revisions to past employment. Externally advertised vacancies have been falling for two years as labor market churn declines. Average earnings growth is slowing.
- Japan’s June import and export growth were both positive, but weaker than expected. Exports were led by semiconductors (hardly a surprise with the AI hype still robust). Imports are more likely than not to disappoint this year, raising some questions about domestic demand.
- It would be very naïve to assume that political partisanship will not affect today’s Philly Fed business sentiment poll, such is the toxic environment of US politics. Initial jobless claims, one of the accurate reports on labor market conditions, are due.
