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Consumers and global demand

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  • Japanese equities have rallied - this can hardly be on the further decline in domestic consumer confidence. Instead, media reports hinting that the next consumption tax increase may be cancelled (and a snap election called) would seem to be the trigger.
  • Japanese export data showed surprising strength, offering yet another signal that the health of global demand is not that bad at all. The complexity of supply chains today means that where that demand is actually occurring is difficult to discern.
  • UK retail sales (BRC) were stronger than expected - coming in unchanged despite the price competition of the food sector. Non-food sales rose 2.8%, supported by consumer durable items (if those purchases were credit fuelled, it may pique Bank of England interest).
  • Rosengren of the US Fed was predictably dovish in comments yesterday, wanting accommodation to stay in place until 2% inflation was certain to be met. The Fed can probably be reasonably certain 2% inflation will be hit next year, as the labour market tightens.

Listen to the audio version of this briefing.