Masking fear

Posted by: Paul Donovan

29 Jun 2020

Daily update

  • Fear of the virus has risen in parts of the US, with Texas, Florida and California tightening restrictions. US Vice President Pence urged people to wear masks (mask wearing had become politicized in the US). However, the fear does not appear to be as great as it was earlier this year – consumers and policy-makers now have a different reaction function.
  • The virus continues to create data quality problems – we know that inflation data contains large numbers of made-up prices. Academic research is suggesting that while still very low, inflation is probably higher than is being reported in the data. Germany and Spain offer consumer price inflation today.
  • Japanese May retail sales recovered (the data was within the consensus range, which was -4.0% m/m to +8.2% m/m. It is not hard to hit a range over 12% wide). South Korea also reported an improvement in department store sales.
  • Bank of England Governor Bailey is to speak at a conference on financial risk and climate change. The environmental credit crunch has not disappeared, and indeed has probably been accelerated by the pandemic. Central banks have limited tools to influence climate change, but they have to deal with the economic and market consequences of it.

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