Growth and tightness

Daily update

UK GDP continued its recent strength, with further gains in the third quarter. (The numbers are just a rough approximation, of course). Services led growth, with car and chemical imports the main offset. UK consumers have generally experienced a small positive real income growth, but have room to reduce savings rates and continue consuming.
US initial jobless claims data may get some attention in an otherwise relatively quiet data calendar. US policy-makers would have to be concerned if there were evidence of a really tight labor market, creating a wage-price spiral. However, in spite of repeated inflation shocks, that has not emerged. Housing data is also due.
There are several Federal Reserve speakers scheduled, at a time when there is heightened interest in the direction of US monetary policy. The tone of recent remarks has covered a fairly broad spectrum of possibilities. ECB President Lagarde will also be offering comments in Paris, but these are less likely to interest markets (already looking toward Lagarde’s potential successors).
There is more noise around the Gulf war, with Iran reiterating that it (and Oman) will exert control over the Strait of Hormuz. Markets are not surprised by that, and for now there is enough to keep the optimism bias still intact.