Don't overreact to single data points
- Australia's Reserve Bank left interest rates unchanged at 1.5%. This had been predicted by 26 out of 26 surveyed economists, and how could 26 economists ever be wrong?
- The UK's BRC retail sales data showed an unexpected decline in August. Food sales were supported by picnics and barbecues. It is wrong to overreact to one month's data – the impact of the EU referendum is likely to be felt later in the year.
- Eurozone GDP for the second quarter is due. The problem with this number is that it masks the divergent growth (and divergent inflation) within the Eurozone. Swiss GDP was stronger than expected, supported by government spending.
- The US, returning from a holiday weekend, has service sector sentiment data from the ISM. This is less subject to the distortions of currency moves than is the manufacturing data. Labor and price subcomponents are worth looking at.