In today’s briefing:
- US Continues to Overheat, Reflected in a Seemingly-Weak GDP Print
- CX Daily: Will Wind Go Out of SPACs’ Sails in Singapore and Hong Kong?
- EA: Core Inflation Burns-Off Energy Fall
US Continues to Overheat, Reflected in a Seemingly-Weak GDP Print
- Nominal GDP increased 6.5%QoQsaar, but the GDP deflator was up 8%, so real GDP declined 1.4% in Q1CY22. With core PCE inflation at 5.4%, brace for 50bp hike next week.
- With M2 growing faster in Apr’20-Mar’21 than any time in the past 150 years, the recent surge in inflation is precisely as we’d predicted. The overheating economy needs monetary tightening.
- Imports (+17.7% in Q1CY22) subtracted 2.5% from GDP and inventory-destocking subtracted 0.84%. These will be less negative as monetary policy tightens, with FF rate rising to 2.75% by end-2022.
CX Daily: Will Wind Go Out of SPACs’ Sails in Singapore and Hong Kong?
In Depth: Will wind go out of SPACs’ sails in Singapore and Hong Kong?
China’s cabinet vows stronger policy to boost jobs amid Covid upsurge
Yuan losses have room to run as Covid puts economy under siege
EA: Core Inflation Burns-Off Energy Fall
- EA inflation increased again in Apr-22 to 7.5%, extending the trend to a fresh high. Surprisingly intense core pressures offset energy price declines.
- Upside news was relatively broad-based for our forecast, albeit with Spain far weaker than the consensus expected amid deep energy price declines.
- The Q2 inflation outlook has eased with energy, but it is still on track to beat the ECB’s forecast by almost 2pp. We still expect it to hike in Sep-22.
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