Magic numbers

Daily update

China's latest economic data showed a lackluster domestic economy. Retail sales slowed, and were weaker than expected. Domestic investment plunged more than expected. Industrial production is being supported by external demand and China's success in helping US customers avoid tariffs.
Financial market headline writers are working themselves into a sensationalist frenzy as US 10-year Treasury yields exceed 5.0%. Economically, there is no significant difference between a 4.9% yield and a 5.0% yield. Politically, 5.0% has more impact, as does the direction of travel. US Treasury Secretary “House" Bessent's attempts to steer the market have not been crowned in glory, and US fiscal policy has very limited credibility at the moment.
UK August labor market data was as dull as economic data can be (economics is never dull). The figures were broadly in line with expectations—a steady unemployment rate and, critically for policy setting, no evidence of wage pressures from the earnings numbers.
The German ZEW business confidence poll is due. Confidence data has lagged economic reality and economic reality is doing OK. The US Empire manufacturing sentiment poll should have no bearing on monetary policy. There is much to criticize around US monetary policy “leadership” but a single sentiment poll should not change policy perspectives.