Daily update
Daily update
- The European Central Bank is expected to ease rates a quarter point today, as it continues its policy of following inflation lower. Seen over a proper time frame this is not properly a stimulus, as it is more focused on stabilizing real rates. Lagarde’s press conference will hopefully signal a steady pace of rate cuts to come.
- Yesterday’s US consumer price data moved further into a world of fantasy, with the fiction of owners’ equivalent rent pretty much the only prop to inflation. A homeowning household faces an inflation reality of around 1.2% y/y, the lowest rate since the pandemic. This enhances spending power, and is a strong argument against a hard economic landing. The data suggests the Federal Reserve should be cutting at every meeting to catch up with inflation, but quarter-point cuts will suffice.
- US producer price inflation should be benign—fantasy pricing is generally excluded from this data. There are also the weekly initial jobless claims numbers. Unlike the employment report, these are accurate, as they measure reality not opinions, but jobless claims do not represent everything that is happening in the US labor market.
- Japanese August producer price inflation was below expectations, as it has been for most of the recent months.
