Growth and inflation (neither is a problem)

Posted by: Paul Donovan

01 Mar 2021

Daily update

  • South Korean February export data was strong in an absolute sense, but in theory below the market consensus. In reality, the market forecast range was so wide as to make the consensus a meaningless concept. Strong exports signal good global demand, while weak exports could signal weaker global demand or supply chain problems (with the latter perhaps more likely).
  • German consumer prices are due for release. The numbers have been boosted by a sales tax increase. Last year, consumer prices underreported inflation reality, and the harmonized measure will now correct for that (adding to the headline number).
  • The US ISM manufacturing sentiment opinion poll represents an inaccurate assessment of a sector that is of declining importance in the US, but will still attract attention. Global manufacturing has completely recovered from the pandemic—but this is because of the revival in Asia and the Eurozone. The US is still lagging behind.
  • US Fed President Williams and Fed Governor Brainard are both speaking today. Such speeches matter more now that economic thought leadership at the Fed is not necessarily embodied in the Fed chair. The Fed seems unconcerned by recent bond market volatility (the bond market also seems unconcerned by recent bond market volatility).

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