Syz the moment

Government spending jumped 15% in June, the same month we had the debt ceiling “crisis.” Ironically, in the same month we had a debt ceiling crisis, US Federal spending hit a near record and annualized interest expense crossed $900 billion. Source: The Kobeissi Letter

China said Monday that 2nd quarter gross domestic product grew by 6.3% from a year ago, missing expectations (+7.3%). This marked a 0.8% pace of growth from the first quarter, slower than the 2.2% quarter-on-quarter pace recorded in the first three months of the year. The unemployment rate among young people ages 16 to 24 was 21.3% in June, a new record. Retail sales for June rose by 3.1%, a touch below the 3.2% expected. Industrial production for June rose by 4.4% from a year ago, better than the 2.7% forecast. So far, Beijing has shown reluctance to embark on greater stimulus, especially as local government debt has soared. A Politburo meeting expected later this month could provide more details on economic policy. Source: Bloomberg, CNBC

Jim Bianco Research shows consensus expectations for the coming quarters are pointing towards a very small contraction. The blue line is the June update of a survey conducted by Bloomberg of around 70 economists showing the median forecast for the next six quarters.

Maybe not yet...United pilots could get raises of up to 40% under a preliminary deal, after similar agreements were made at Delta and American Airlines For the first time in many decades the labor force has the upper hand in negotiating across a broad swath of industries, and they're using it as much as they can. Bottom-line: The wageflation story isn't quite over yet. Instead, it is evolving. Source: Markets Mayhem, Wall Street Journal

The investment chief at one of the world’s top hedge funds has warned the US battle with inflation is far from over, and bets on a rapid series of interest rate cuts from the Federal Reserve next year are premature. Bob Prince, co-chief investment officer of Bridgewater Associates, said markets were wrong to assume the Fed will soon ease monetary policy. “The Fed is not going to cut,” he told the Financial Times. “They are not going to do what is priced in.” Pricing in futures markets indicates that investors anticipate one further 0.25 percentage point rate rise from the Fed’s current target range of 5 to 5.25 per cent by the autumn. Over the following 12 months they expect the central bank to reverse course, cutting borrowing costs six times to around 3.8 per cent by November 2024. “Inflation has come down but it is still too high, and it is probably going to level out where it is — we’re likely to be stuck around this level of inflation,” Prince said. “The big risk right now is that you get a bounce in energy prices when wages are still strong”, which could drive a rebound in inflation, he added. Prince, who oversees the Connecticut-based firm’s assets with co-CIOs Karen Karniol-Tambour and Greg Jensen, said he believes core inflation is likely to bottom out between 3.5 and 4 per cent, pushing the Fed to tighten monetary policy further and disappointing investors who this week sent US stocks to their highest level in over a year. That tightening “could take the form of holding rates steady in the face of expectations of a cut”, he said. Source: FT

Source: BofA

The Biden administration announced it would automatically cancel education debt for 804,000 borrowers, for a total of $39 billion in relief. The debt cancellation is a result of the administration’s fixes to repayment plans, which included updated counts of borrowers’ payments. Source: CNBC

Disinflationary trends in the US 1) CPI Inflation: 3.0%, Lowest since March 2021. 2) PPI Inflation: 0.1%, Lowest since August 2020. 3) Import Prices: -6.1%, Lowest since May 2020. 4) Export Prices: -12%, Lowest on record. Source: Charlie Bilello