Expectations continue to slide for next week’s release of GDP data for the second quarter (scheduled for July 28). The median estimate is still positive, just barely, but has fallen recently, based a set of nowcasts compiled by CapitaSpectator.com.
Macro Briefing: 20 July 2022
* Brutal heatwave continues to bake Europe
* Extreme heat damages estimated at 0.3% to 0.5% of Europe’s GDP
* Global warming raises risk of extreme heat events
* EU will outline plan to curb Russian gas use as Putin issues new warning
* 100 million Americans issued heat advisory warnings
* UK inflation reaches new 40-year high: +9.4% at annual pace
* US housing starts in June fell to lowest level in nine months:
10-Year Treasury Yield ‘Fair Value’ Estimate: 19 July 2022
US headline inflation continues to set to new four-decade highs and the Federal Reserve continues to signal that it will continue raising interest rates. The bond market, however, is starting to consider the possibility that peak inflation and peak policy tightening is approaching.
Macro Briefing: 19 July 2022
* Russia edges closer to shutting gas flow to Europe
* China will take “forceful measures” if US House Speaker Pelosi visits Taiwan
* New coronavirus lockdowns in China raise questions about economic outlook
* Eurozone inflation rises to new record high, adding pressure for rate hikes
* Inflation is “deeply entrenched” in global economy, says Goldman CEO
* Strong dollar is factor weighing on recent fall in commodity prices
* UK is expected to set hottest day for Tuesday
* US homebuilder confidence fell sharply in July:
US Bonds Rallied Last Week, Offering Ballast Vs. Losses Elsewhere
Fixed-income markets in the US reverted to their traditional role of delivering upside support when the rest of the portfolio tanks. It’s too soon to say if this is a return to form for bonds for an extended period, but with more rate hikes expected there’s still plenty of room for debate.
Macro Briefing: 18 July 2022
* Russia’s war against Ukraine looks increasingly like terrorism
* US retail sales rose more than expected in June
* Fed officials signal they are likely to raise interest rates by 0.75 percentage point
* Economic pain is sweeping across Europe (and Russia)
* Consumer sentiment ticked up in July but remains near record low
* US industrial output fell in June–first monthly decline this year
* Earnings season off to slow start, adding new headwind for stocks
* Strong dollar could help the Fed fight inflation
* Mixed jobs data lift uncertainty for US labor market outlook
* Real wage growth is taking a hit from inflation:
Book Bits: 16 July 2022
Tom Wheelwright
Summary via publisher (Wiley)
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S&P 500 Risk Profile: 15 July 2022
The US stock market has stabilized in recent weeks, but the downside bias still appears intact. Several risk factors support this outlook, including a weak technical profile; high inflation that will likely convince the Federal Reserve to continue raising interest rates; a rising if not yet decisive threat of a US recession; and the ongoing uncertainty/blowback for the global economy due to war in Ukraine.
Macro Briefing: 15 July 2022
* China GDP growth slows to weak 0.4% annual increase in Q2
* China reports highest daily Covid cases in 7 weeks as lockdowns spread
* Italy in political crisis as prime minister urged to rethink resignation
* Joe Manchin, key Democrat vote in US Senate, rejects climate, tax measures
* US jobless claims rise to highest level in nearly 8 months
* Despite expectations of more Fed rate hikes, US 10yr yield holds below 3%:
Peak Inflation Watch: 14 July 2022
Yesterday’s US consumer inflation data for June surprised analysts with a hotter-than-expected report. The news has convinced the market that the Federal Reserve will ramp up the pace of rate hikes to a 100-basis-point increase at the July 27 FOMC meeting. Peak inflation, it seems, remains elusive as ever. Perhaps, but there are still some hints that turning point is near. The question is how much weight to assign to these relatively encouraging hints?