Daily update

  • The US middle-income consumer is doing just fine, with yesterday’s retail sales data showing little fear of unemployment and a willingness to indulge in the national pastime of spending money. Today’s Michigan consumer sentiment data will tell us about the extraordinary degree of US political partisanship, not about what consumers are feeling.
  • Inflation has become a politicalized issue in the US—hence, Vice President Harris’s focus on food prices. The US presidential election may be won or lost in the aisles of WalMart. Consumers’ inflation perception is strongly influenced by food pricing, and food pricing is susceptible to profit-led inflation (because consumers have less information about costs than retailers do).
  • UK July retail sales were as expected, helped by price discounting and people rushing to buy tennis rackets after watching Wimbledon. UK retail sales are a real measure, and UK spending is growing at roughly the same pace as in the US.
  • EU June trade data is due. This is not normally a market focus, but with trade protectionism on the rise (in this case, directed against China), there may need to be more attention given to this sort of data. The figures may also help understand the realities of China’s export situation.
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