Daily update
Daily update
- The Federal Reserve is not expected to raise rates this week, but after Fed Chair Powell’s June 2022 policy errors trashed forward guidance nothing can be certain. Data dependency does not help when data itself is unreliable (and potentially politically biased).
- The US NAHB housing market index is due. Fed rate hikes have not impacted existing homeowners, nearly all of whom locked in mortgage rates and have barely noticeable monthly payments. However, new home owners are facing higher borrowing costs, especially relative to weaker consumer spending power.
- There is speculation about a face-to-face meeting between US President Biden and China’s President Xi. Markets are unlikely to get too excited. The Trump administration’s taxes on US consumers of Chinese goods remains in place. Economic nationalism is a growing global trend.
- Oil prices are likely to continue to be a focus for investors—Brent crude is still over USD90 per barrel. This is a different situation to the start of the war in Ukraine in 2022. Then, consumers in the US and Europe were (effectively) able to transfer pandemic era savings to oil producers to meet the higher prices without cutting non-oil consumption. With savings depleted, higher oil prices today are more likely to be growth deflationary.
