Macro Briefing: 2 September 2022

* Russia’s energy influence over Europe is “over,” predicts analyst
* Global bonds market in first bear market in a generation
* US mortgage rates up more than 50 basis points over past two weeks
* Global manufacturing output fell back into contraction in August via survey data
* US ISM Manufacturing Index steady in August, reflecting moderate growth
* Amazon’s efforts to block unionizing efforts appear to fail
* Big tech is looking to shift a portion of production out of China
* US jobless claims fell last week, easing to lowest level in two months:

Housing may be the source for the next signal in a Fed pivot, advises the chief investment strategist at Absolute Strategy Research. “Easy monetary and fiscal policy, post-pandemic, has helped fuel 20 per cent US house price inflation (the fastest seen since December 1946),” writes Ian Harnett. “Three-year house price inflation of 46 per cent in nominal terms and 28 per cent in real terms has only been matched by the bubbles of the early 1980s and mid-2000s in the past 70 years. However, these “good times” for US housing look to be ending as property faces a perfect storm of rising financing costs, squeezed demand and increased supply.”

The first bear market in a generation weighs on the global bond market. “I suspect that the secular bull market in bonds that started in the mid-1980s is ending,” says Stephen Miller, an investment consultant at GSFM, a unit of Canada’s CI Financial Corp. “Yields aren’t going to return to the historic lows seen both before and during the pandemic.”

Global supply and commodity price pressures continued to ease in August, according to PMI survey data. “The Global Price Pressures Index fell to its lowest level in two years, with the index reading of 1.0 suggesting that commodity prices were rising at a pace that was in line with the long-run average,” reports S&P Global. “Similarly, the Global Supply Shortages Index slipped to a 20-month low in August (index at 3.3). This indicated that shortages of raw materials were the lowest since December 2020, albeit still over three times higher than the usual level.