Daily update
Daily update
- Federal Reserve Chair Powell said yesterday that the strength of the US economy and labor market meant the Fed could take its time in cutting rates. This is a rather risky point of view. US inflation has collapsed more than eight percentage points, and the harmonized measure is below 2%. Taking time means tightening policy further. Can the US economy withstand more tightening?
- Powell seems to have a rather trusting belief in the precision of economic data. The declining accuracy of data reduces certainty about the state of the US economy. While a soft landing seems to have been achieved, looking across a broad range of indicators there are signs of strain (perhaps especially in the labor market).
- In France, over two hundred candidates have withdrawn from three-way contests in the second round of the national assembly elections. This is a “front républicain”, aimed at preventing the far-right Rassemblement National from taking office. Markets will view this as reducing the possibility of an absolute majority in the assembly.
- Assorted sentiment polls clutter the calendar, and there is ongoing central bank chatter. The US is releasing May factory orders data, but this is rarely an indicator that markets care that much about.
