Daily update
Daily update
- Yesterday equities were a little upset because bonds were a little upset because of weaker demand at a US bond auction. Should investors be upset? This is not a US version of the UK’s Truss debacle. Markets are not disorderly and government policies are not destabilizing. The absolute level of debt is not a concern—many countries (including the US) have had and do have higher debt ratios. The political polarization that prevents a policy for a sustainable deficit is a concern, but is probably more a background worry for now.
- The Federal Reserve’s Beige Book was somewhat downbeat. Risks to economic growth were highlighted (political bias may have had an influence on responses). Consumer rebellion against price increases was noted—the final stage of a profit-led inflation episode.
- Spanish May consumer inflation is scheduled, after German data was a fraction higher than consensus (the first time this year). Energy prices are expected to add to headline inflation. Note that the “consensus” for some details is based off very few forecasts, and should be treated with caution.
- The US revises 1Q24 GDP growth again (no change is expected). This is not the final revision. An accurate picture of 1Q24 US growth should emerge sometime around 2029 or 2030.
