Quantities of money

Daily update

Yesterday, French protestors took to the streets over the last government’s proposed spending cuts. This makes good social media content, and confirms stereotypical media biases, but should not change things for investors. France has large reserves of private wealth that could be mobilized to help fund government borrowing, but more democratic wealth increases mean that such mobilization would affect ordinary citizens.
UK government borrowing rose in August on higher government spending. Consumers are also prepared to spend, which ultimately helps tax revenues. August retail sales were stronger than expected. The Bank of England left rates unchanged but scaled back quantitative tightening, as money supply and money demand approach equilibrium.
Japan’s August national inflation data slowed a little on the headline. Internationally defined core inflation has been steady since mid-2024. Japan’s price story is mainly a relative rice price rise, not a general supply-demand imbalance creating inflation pressures in the economy. The Bank of Japan is to start selling exchange traded funds (reducing the quantity of money in the economy).
US President Trump has asked the Supreme Court to permit the removal of Federal Reserve governor Cook. International investors have a keen interest in whether or not members of the Fed have more employment security than presidential counsellors.