Daily update
Daily update
- Today’s data calendar is a barren wasteland of nothingness—so quiet that even former US Treasury Secretary Summers should find it difficult to justify offering media commentary. In the absence of data, the risk is that idle speculation takes over markets.
- The release of US consumer price inflation later this week is a likely source of idle speculation. No single data point should ever be taken that seriously, but US Federal Reserve Powell’s June policy errors elevated its importance. This month’s data takes place using new weights. The importance of Owners’ Equivalent Rent has increased, which may raise consumer prices in the near term and lower them longer term.
- Owners’ Equivalent Rent is a fantasy price no one pays. It is loosely linked to market rents—with a lag—and so is expected to be disinflationary later this year but is currently adding to inflation. It is worth remembering that while markets may get worked up about the effect on consumer prices, these moves have no impact on consumers’ spending power, because it is a fantasy price.
- The European Commission is publishing economic forecasts, but the market importance of these is zero. Institutional forecasting processes mean that markets tend to have priced in any relevant economic information long ago.
