The politics of debt

Daily update

The US provides another official estimate of second-quarter GDP. These numbers will be revised further in the future. Policy expectations distorted demand patterns for domestic consumers, but the relative strength of the middle-income US household balance sheet late last year provides a foundation for some consumer spending. Weekly continuing claims for unemployment insurance are a modest market focus.
Federal Reserve Governor Waller, who dissented in favor of a rate cut, will be speaking today—and taking questions. Whatever Waller’s motives for the dissent, it is unlikely that those drivers have changed in the past few weeks.
The Dutch government survived a vote of no-confidence. In France, however, Prime Minister Bayrou is holding talks with legislators to try and win support ahead of their forthcoming vote of no confidence. French bond yields have been rising relative to other European government bonds. While anxiety about French debt levels is not going to disappear, it is always worth remembering the other side of the balance sheet—France has a lot of domestic wealth that might be mobilized.
The Bank of Korea did not cut interest rates, but hinted at possible future rate cuts. There is a focus on domestic demand given uncertainties around global trade.