US retail sales data was stronger than expected overnight, ramping up the inflation pressure on the Fed. But China’s growth is slowing sharply, leading to a surprise rate cut. Oil prices slid 2% on China’s weak data.
In our bonus deep-dive interview, ANZ’s Senior Commodities Strategist Daniel Hynes details what an even harder slowdown of apartment building in China might do to commodity prices.
5 things to know
US retail sales growth more than doubled to 0.7% in July and beat the 0.4% consensus. ANZ’s Head of G3 Economics Brian Martin says the Fed will have to watch inflation pressures like a hawk.
China’s retail sales, industrial production and investment was much weaker than expected in July. The PBoC cut its policy rate unexpectedly. ANZ’s Chief Economist for China Raymond Yeung says it may not be enough.
Yeung sees the PBoC having to cut again as soon as September, and also cutting the RRR to revive consumer and investor confidence.
The National Bureau of Statistics of China decided not to publish the youth unemployment rate in July. It was 21.3% in June. ANZ saw over 22% for July.
Q2 wage inflation in Australia of 0.8% was a bit weaker than expected. ANZ’s Head of Australia Economics Adam Boyton sees it rising in Q3, with the RBA still on hawkish pause. Also, Australian consumer confidence is showing some green shoots, says Senior Australian economist Adelaide Timbrell.
Cheers
Bernard
PS: Tomorrow we’ll hear analysis from the RBNZ’s MPS due later today.
