China’s retail sales and industrial production picked up pace in August with better-than-expected growth, according to National Bureau of Statistics data released Friday
Retail sales grew by 4.6% in August from a year ago, beating expectations for 3% growth forecast by a Reuters poll. The increase was also faster than the 2.5% year-on-year pace in July. Industrial production grew by 4.5% in August from a year ago, better than the 3.9% forecast and faster than the 3.7% increase reported for July. Fixed asset investment, however, grew by 3.2% year-on-year in August on a year-to-date basis. That missed expectations for a 3.3% increase and was slower than the 3.4% pace reported as of July. The figure was dragged down by a steeper drop in real estate investment, and a slowdown in infrastructure investment. Only manufacturing saw the pace of investment pick up. Statistics bureau spokesperson Fu Linghui said the real estate market was still in a period of “adjustment” and noted declines in sales and investment. Source: CNBC
OOPS! A bank liquidity indicator sounds the alarm!
Usage of The Fed's emergency bank funding facility rose once again (+$208M) to a new record high over $108BN as long-term government bond yields keep rising... Source: Bloomberg
European Central Bank hikes rates to a record 4% as inflation risks outweigh economic gloom.
- The ECB just raised its key rates again today, by 25bp (main Refi rate at 4.50%, deposit rate at 4.00%) - Concerns around the underlying inflation dynamic appear to have overwhelmed the ongoing negative (and concerning) dynamic in Europe’s economic growth: "inflation continues to decline but is still expected to remain too high for too long. The Governing Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner. In order to reinforce progress towards its target, the Governing Council today decided to raise the three key ECB interest rates by 25 basis points." Source: Bloomberg
Despite QT of almost 1T$, Fed net liquidity* actually increased fueling the rally in big tech
Remarkable chart from Steve Donze at Pictet Asset Management thru Michel A.Arouet. *Net liquidity is a term that refers to the amount of cash and credit available for transactions, purchases, or investments. It is calculated by adding up the money supply and the outstanding credit in a given currency or region. Source: Pictet Asset Management, Michel A.Arouet
EURUSD pair continues a bearish trend after ECB hike
EURUSD stays on a rather bearish EUR bullish USD trend which wasn’t helped by today’s ECB decision to increase rates by another 25bps. Shortly after the ECB’s announcement, US PPI came out slightly higher than expected which led the pair to reach a low of 1.0656 before stabilizing around 1.0675.
Support: 1.0650, 1.0605, 1.0560
Resistance: 1.0720, 1.0770, 1.0810
Source: Bloomberg
Today is ECB day
What is the Taylor rule telling us when it comes to theoretical interest rates based on German data? Key interest rate should be at 10.9%, so 6.6% higher than current rate, according to Taylor Rule with German inflation at 6.4% & unemployment below NAIRU. Howeverm the spread between Taylor Rule rate & ECB key rate is lower than it has been since 2021. This might suggest that hike cycle could soon come to an end. Source: Bloomberg, HolgerZ
Stock Market: "We don't need central banks anymore, we have AI"
Source: Jeffrey Kleintop
The continued strong demand for consumer services is why the Fed is unable to contain core inflation
According to Apollo, a record 22% of US consumers are planning to vacation in a foreign country. US households want to travel on airplanes, stay at hotels and eat out. The Kobeissi Letter: "That is why inflation in the non-housing service sector continues to be so high. No wonder credit card debt is skyrocketing". Source: The Kobeissi Letter, Apollo
