Consumers consuming

Daily update

US producer price inflation is due. This does not have the political importance of consumer price data. It matters because most companies sell to other companies (not end-consumers). It is also mercifully free of the fiction of owners’ equivalent rent. However, producer prices do not tend to capture profit-led inflation, which hits at the end of supply chains.
US Michigan consumer sentiment data offers entertainment, not substance, providing the breakdown of Republican and Democrat sentiment. Political polarization in surveys is likely to increase as November approaches. Anyone who thinks business sentiment surveys are impartial is advised to look at the comments on the Dallas Fed’s manufacturing survey. If inflation perceptions fall, this might boost Democrat sentiment, but it is unlikely to shift Republican sentiment.
UK January retail sales differ from those of the US. UK data adjusts for inflation, and do not include restaurant sales (US data suggested support for the “spending on fun” thesis, with strong restaurant sales). The UK figures were strong, and credit card data adds to the idea that the UK consumer is still spending. Price discounting seems to encourage consumption.
German wholesale prices remain in deflation, but are not a market focus. The normal smattering of central bank speakers are on the agenda.