Daily update
Daily update
- Friday’s US employment report was stronger than expected, but the surprises could be revised away in the coming months (US data quality has deteriorated, meaning more revisions). However, Federal Reserve Chair Powell’s failure to articulate an economic thought process and consequent mantra of “data dependency” has left markets at the mercy of high frequency data releases of dubious quality.
- Developed economy inflation data has tended to be lower than expected; the same is true for China. Consumer and producer price figures moved further into deflation territory. Consumer prices were pushed down by fuel and food prices—we know about weaker fuel prices already, and the price of vegetables in China has little relevance to European or US inflation.
- Central bank meetings take place this week; “they would say that, wouldn’t they” seems an appropriate summary. Central banks are likely to try to reduce expectations of rate cuts through rhetoric. Markets are likely to look at the ending of profit-led inflation and price in rate cuts anyway.
- The New York Fed consumer expectations survey is a lone data point in a very empty calendar today. It includes inflation expectations, which will be monitored but which are subject to political bias and will tend to reflect current food and fuel prices.
