Consumer confidence, inflation
Market volatility, the ups and downs, are strongly rooted in the confidence of households, regarding their future employment and financial prospects, which is why we track these measures globally.
Now, in markets, you pick your numbers and narrative. If you subscribe to UM-C, boy are you bearish, and likely accordingly positioned.
A number one issue for voters, and thus consumers, is inflation, and whether wages are rising faster than the cost of living. It’s hard to be confident if your real purchasing power is eroding. Here’s the data, as a reminder ahead of tonight’s CPI print.
The bond market, for what it’s worth, is still very much in the transitory camp, despite the run in the 10 year yield.
Else, it would be much higher….
We remain in the transitory camp, with the magic of markets to unwind supply bottlenecks, over time, and there is encouraging data from global freight rates, increased truck availability, and decreased shipping container costs, but tonight’s print should still see the effects of global supply chain ructions associated with the war, and as such is pretty cloudy, in terms of our expectations.
And that’s before thinking through the China lockdowns, which is a whole new spanner in the works. Despite being critical for global supply chains, we think the likely drop in commodity demand from China, associated with Covid, could outweigh the costs associated with delays, shortages and otherwise greater inefficiencies.
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