Macro Briefing: 29 July 2022

* China President Xi warns Biden on interference with Taiwan
* Biden and China President Xi, after call, plan to meet in person
* China signals no big stimulus planned to support slowing economy
* Is the US in a recession? Answer depends on the analyst you ask
* Inflation in Eurozone in July reaches record-high 8.9% for past year
* Eurozone GDP growth picked up to +0.7% in Q2, but…
* German GDP ground to a halt in Q2
* Big tech looks resilient as economy weakens
* US jobless claims edge lower but remain near 2022’s highest level
* US Q2 GDP declines, marking second straight quarterly loss:

Mortgage rates fall as outlook for US economy weakens and demand for housing slides. The 30-year fixed-rate mortgage averaged 5.30% for the week through yesterday (July 28). That’s still relatively high vs. recent history but it’s down from the previous week’s 5.54%. “It’s clear that over the past two years, the combination of the pandemic, record low mortgage rates, and the opportunity to work remotely spurred greater demand,” says Sam Khater, Freddie Mac’s Chief Economist. “Now, as the market adjusts to a higher rate environment, we are seeing a period of deflated sales activity until the market normalizes.”

China hints that it may miss its growth target as Covid restrictions remain in place. The Politburo, the ruling Communist Party’s policy-making body, says it plans to keep growth within “a reasonable range”. But “the 5.5% growth target is no longer a must for China,” says Iris Pang, chief China economist at ING Bank.

US Treasury market’s implied inflation forecasts turned up in recent days, but remain well below previous peak: