Daily update
Daily update
- It is US employment report Friday, which means economists will be tirelessly reiterating their monthly reminder that “average hourly earnings are not wages.” The increase in the number of people taking additional jobs to help overcome disastrously bad real wages will tend to lower average hourly earnings. However, as not all the job layoffs that have been announced have been implemented, the payrolls number may get some support.
- The Bank of England’s 50bps rate increase was coherently explained as an insurance against unexpectedly high inflation. The bank does expect inflation to fall quite quickly, and that raises the possibility of rate cuts if insurance is not required later in the year.
- The explanations around the European Central Bank’s 50bps rate increase were a little less coherent (there is no forward guidance, but the next hike will be 50bps). The ECB does seem likely to continue raising rates for longer—partly because it was late to start, but perhaps also because a large, faction-ridden decision-making body under weak leadership may find it difficult to change course.
- Europe has some business sentiment opinion poll data, completely (and rightly) overshadowed by the US employment report. The tone of media reporting has been more positive in Europe, which should offer support to sentiment.
