Saving the US consumer

Daily update

The important point from yesterday’s US data was not the larger-than-expected downward pressures on reported inflation—these are technical changes that US consumers do not experience in their daily struggles with the affordability crisis. The important point was savings. Lowering savings rates are how US consumers keep spending. The savings rate level was revised higher. This suggests savings can pay for tariffs and oil prices for longer.
Japan’s Tankan business sentiment poll is perhaps more reliable than most sentiment surveys. It was not especially weak, but also not especially strong. That reasserted the dominance of fundamentals over US Treasury Secretary “House” Bessent’s ineffective currency intervention, weakening the yen.
France unveils a budget plan. Countries’ budgets are rarely as important to markets as politicians would like to believe, but France’s bonds are the worst performing in the G7 year to date. A debt crisis remains a very remote possibility, however. France’s household wealth is four times the size of the government debt.
Today’s central bank speakers include Bank of England governor Bailey. US President Trump wants former central bank head Powell to resign as a Federal Reserve Governor—it is worth noting that Fed governors have to be confirmed by the Senate, and control of the Senate might change.