Four billion dollars

Daily update

US Treasury Secretary Bessent declared the proposed Treasury buybacks could be four billion dollars. Bond investors seem to feel that four billion dollars is not terribly impressive. Yields rose—though a sense of proportion is helpful. This is hardly a repeat of the 1994 bond market collapse. What matters is whether the bond weakness has attracted US President Trump’s attention, triggering a policy response.
Bessent announced a future fiscal consolidation plan, targeting “waste”. That is not reassuring, as (advanced) economies’ targeting waste for fiscal gain is normally a waste of time. Details of “economic warfare” against Iran are due Monday. Insubstantial sanctions may reignite markets’ optimism bias (and thus hopes of lower inflation). Aggressive sanctions may stoke fears that the Strait of Hormuz remains closed, and US importers may face higher tariffs when buying from Iran’s trading partners.
South Korea’s early August export numbers showed strength, predictably on the back of semiconductors. The Bank of Korea raised rates at its last policy meeting and meets again next week.
UK July retail sales were impacted by weather (sales of electric fans were good). Early discounting seems to have pulled some sales volume from July into June. The volume of fuel sales has trended down, blunting the impact of oil prices.