Independence Day

Daily update

From time to time, these comments might have given the impression of dissatisfaction with Federal Reserve Chair Powell. While one can (very) credibly disagree with Powell’s policies, those policies are independent. Yesterday, Powell defended that independence, publicly correcting US President Trump’s errors about the Fed’s building projects. Powell suggested that Trump’s trade tax policy was behind some cost overruns (a subtle reminder that US consumers pay tariffs, not foreign exporters).
US June durable goods orders data will not clarify the US monetary policy outlook. The Biden factory building boom supported some equipment orders, but that boom has stagnated this year. Democrat consumers showed signs of front-loading durable goods purchases ahead of tariffs, but Republicans did not. The numbers end up being noisy.
Japan’s July Tokyo consumer price data moderated a little more than expected (the international-defined core rate fell from 1.8% y/y to 1.6% y/y). Food prices continue to dominate the headline numbers, though their impact is waning. One-off disinflation forces are likely to be overlooked by policy-makers.
UK June retail sales are likely to be impacted by unusually warm weather. This changes the composition of spending, with food that can be used as burnt offerings on a barbecue, and of course alcohol, being prioritized in household budgets.