Summary
United States: Let’s Wait and See
- There was no shortage of economic data this week, but little did much to change the macro landscape. The April inflation data were a step in the right direction, and if sustained, we see the first rate cut coming in September.
- Next week: Existing Home Sales (Wed.), New Home Sales (Thu.), Durable Goods (Fri.)
International: Mixed Data from Foreign Economies
- In this week’s data, U.K. wage growth surprised to the upside, but the underlying details were a bit more encouraging; we maintain our outlook for an initial Bank of England rate cut in August. Japan’s GDP contracted more than expected, by 2.0% quarter-over-quarter annualized. Swedish CPI inflation continued its journey back to target, affirming the central bank’s decision to ease monetary policy last week. In China, industrial output firmed while retail sales softened, and in India, CPI inflation slowed by less than expected.
- Next week: Canada CPI (Tue.), U.K. CPI and PMIs (Wed. & Thu.), Chilean Central Bank Policy Rate (Thu.)
Interest Rate Watch: Fed Rate Cuts Back on the Table?
- Market participants have significantly dialed back their expectations of the total amount of Fed easing this year, but recent data keep a 25 bps rate cut at the September meeting in play.
Credit Market Insights: Are Businesses Still Managing Their Debt?
- Like the mighty consumer, who has steadfastly supported the U.S. economy over this cycle but appears poised to slow spending as the year progresses, businesses remain on firm footing but show signs of weakness ahead—notably a steep increase in business bankruptcies over the past year.
Topic of the Week: Biden Expands Higher Tariffs on Chinese Imports
- President Biden announced a modification of tariff rates on a selection of U.S. imports from China, including batteries, electric vehicles, semiconductors and solar panels. How much of these goods does the United States import from China?
