Daily update
Daily update
- Yesterday’s US retail sales reinforced the resilience of the US consumer. That resilience depends on middle-income consumers, and middle-income consumer resilience depends on real spending power being better than headline data suggests. Inflation pressures continue to moderate, and today’s US import price data should show falling prices.
- With inflation in retreat, why are central banks not making more of the peak of the rate cycle? Mainly because bond traders can do (some) of central bankers’ jobs, and policy makers do not want bond markets to ease financial conditions too much. We hear from several ECB speakers, including (inevitably) ECB President Lagarde, and a reiteration of “we could raise if we wanted” is likely to be heard and ignored.
- US President Biden and China’s President Xi agreed on a few things—military talks and panda exports. Markets do not really care. The US Senate passed legislation to keep the government open a few more weeks—the whole saga starts again at the start of January.
- US October industrial production data is due, and is expected to decline. The 2021 party for consumer goods’ demand is long since over, as people prioritize having fun. Apparently, going to a concert is more fun than buying a washing machine.
