- The US-China cycle of rising and falling tensions continues. The US remains fearful of the national security implications of China learning the latest TikTok dance meme. China has said that despite this, there is no "new Cold War". Markets continue to ignore the noise.
- The Bank of England offered forward guidance on interest rates. As with other central banks, this is not a crisis driven by the cost of credit. Economic forecasts were changed. The new economic forecasts are wrong because all economic forecasts are wrong. We have no precision about what is happening in the economy right now, so there is little chance of being precise in forecasts.
- There was some reference to negative rates. Remarkably, some investors think negative rates might help – they act as a tax, and raising taxes at the moment is probably not a great idea.
- June German factory orders were forecast to come between 2% and 20% month on month. They missed the range (coming in stronger). This emphasises a) data quality is terrible; and b) economic models do not work well in a pandemic. The general story still holds: Consumers spend in May and June, running down inventory; retailers order from manufacturers in June and July; and manufacturers produce from July.