Daily update
Daily update
- The US releases revised second quarter GDP data. The market consensus is for no change (given data quality problems, “no change” in the details may be unlikely). US growth has been distorted this year—export and inventory data swung wildly between the first and second quarters. Unfortunately, the fiction of annualization assumes that what happens in a quarter, however unique, is continually repeated. This exaggerates first quarter weakness and second quarter strength.
- US August wholesale (and retail) inventories data offers interesting detail. Policy led to wholesalers, not retailers, acquiring inventory. Inventory surged in different sectors at different times. Early stockpilers are likely to have exhausted pre-tariff inventory, creating price pressures. Later stockpilers may not be under pressure yet.
- Media reports signal complexity in global trade policies. There are suggestions the G7 and the EU will set a price floor for rare earths (which are not that rare), to encourage production outside of China. Meanwhile, US assistance to Argentina allowed that country to lift export taxes, encouraging China to buy more Argentine soybeans and continue its effective boycott of US soybeans.
- US initial and continuing jobless claims data will get attention, as the Federal Reserve prioritizes weak labor markets over higher inflation. There are some Fed speakers, including the outlier Governor Miran.