In today’s briefing:
- China: An Accident Waiting to Happen? Comparing the Current Chinese Economy to the One in 2015
- FX Watch: Have FX Markets Sniffed out an Upcoming Rebound?
- 5 Things We Watch – PMIs, FX, Japan, Brazil, Inflation
- Spain Election Watch: Why Spain Is Not the Next Italy
- UK: Disinflation Challenges Narratives
- CX Daily: China Needs More Than Monetary Stimulus to Bolster Flagging Economy, Analysts Say
- EA: HICP Decelerating Toward Target
China: An Accident Waiting to Happen? Comparing the Current Chinese Economy to the One in 2015
- Comparable to the China Growth Scare of 2015-2016, the Manufacturing PMI is below 50, imports are falling, and deflation worries are rising.
- The real estate crisis is worse than in 2015-2016, with housing prices falling again, floor space under construction declining, consumer confidence near historic lows, and LGFV financing issues increasing.
- Unlike 2015 (and 2022), the current depreciation of the Chinese Yuan has not (yet) been accompanied by falling stock prices.
FX Watch: Have FX Markets Sniffed out an Upcoming Rebound?
- Welcome to the second research piece in our “Business Cycle Week”.
- In this edition of the series on the business cycle, we will focus on whether FX markets sniff out the cycle ahead of other asset markets.
- Is the USD a bellwether of global trends or is it just a saying?
5 Things We Watch – PMIs, FX, Japan, Brazil, Inflation
- Welcome to this week’s edition of ‘5 Things We Watch’, where we take you through 5 things that we have found particularly interesting in the past week.
- Yesterday we launched the first of a couple of articles focusing on the current business cycle, giving our best guess on where in the cycle we are, what markets are pricing in and most importantly – what will happen next.
- The full articles regarding the business cycle and how different asset classes are positioned for it will be released throughout the week for premium subscribers.
Spain Election Watch: Why Spain Is Not the Next Italy
- Could a right-wing government in Spain follow in the footsteps of Meloni’s crusade against the EU economic framework?
- Tensions are high as we gear up to the all-important general election on Sunday.
- We give you the 4 major reasons why you need not worry about Spain becoming the next Italy.
UK: Disinflation Challenges Narratives
- UK inflation unusually undershot forecasts as the CPI slowed by 73bp to 7.9% in Jun-23. The RPI’s drop to 10.7% matched our relatively low forecast (Consensus 10.9%).
- Unlike the EA, downside surprises have been rare in the UK since its peak. The UK’s median and food price inflation impulse now compare favourably.
- The BoE’s forceful response looks increasingly disproportionate to the CPI news as this outcome matches its forecast. Nonetheless, a 50bp hike remains likely in August.
CX Daily: China Needs More Than Monetary Stimulus to Bolster Flagging Economy, Analysts Say
- Rate /: China needs more than monetary stimulus to bolster flagging economy, analysts say
- Kissinger /: Kissinger meets China Defense Chief in pursuing closer ties
- Consumption /Chart of the Day: China’s consumer spending data show sluggish housing growth
EA: HICP Decelerating Toward Target
- The final EA HICP inflation print confirmed the 0.6pp slowing to 5.5% in Jun-23, while the ex-tobacco rate precisely matched our 5.49% forecast.
- Underlying inflation kept slowing despite the annual rate of “core” (ex-food, energy, tobacco) inflation increasing. It’s not at a target-consistent pace, but it’s getting there.
- Another 25bp ECB rate hike on 27 July remains likely, but the 14 September decision is a close call. Further slowing could prevent hikes, discouraging commitment in July.
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