Oil’s gentle decline was reversed as hurricane Ida reduced North American capacity by over 1m bpd in crude and 2m bpd in refined products. Comparisons with Katrina were feared but not realised as the storm passed through much quicker and the consequent precipitation was spread over a much larger area.
Covid news was more upbeat with US cases continuing to roll over in the more advanced states and Pfizer’s vaccine was granted full approval. Data from Israel showed boosters were effective and the US government indicated that boosters may be made available earlier than previously expected. Down under, news was more mixed with New-Zealand reducing lockdown restrictions in all but 2 of its 16 regions but in Australia cases have continued to rise with some states now only expected to open when vaccination rates reach 70% to 80%.
USA
PMIs remained expansionary but did decline and the Richmond Fed manufacturing index caused a worry, printing an unexpected +9 (24 exp., 27 prev.) with supply chain tightness being figured as the underlying issue. The Federal Reserve’s inflation measure, the PCE deflator, printed +0.4% MoM (0.4% exp., 0.5% prev.) and +4.2% YoY (4.1% exp., 4.0% prev.) with the core measures at +0.3% MoM (0.3% exp., 0.4% prev.) and +3.6% YoY (3.6% exp., 3.5% prev.) Powell’s speech at the now virtual Jackson Hole symposium did not live up to market expectations surrounding taper with yields declining after.
Eurozone
PMIs were expansionary and roughly unchanged, printing with a 59 / 60 handle. Confidence declined a little across all measures (consumer, services, economic & Industrial). Chief economist Lane’s speech hinted that the PEPP’s increased pace of purchases were no longer required.
French PMIs were expansionary and roughly unchanged printing in the mid 50s. Confidence dropped slightly, with business confidence at 110 (112 exp., 113 prev.) and consumer confidence at 99 (100 exp., 101 prev.) German PMIs were expansionary printing in the 60s with commentators arguing the small drop was related to tightness in supply chains. The IFO survey declined a little with expectations at 97.5 (100 exp., 101.2 prev.) and current conditions at 101.4 (100.8 exp., 100.4 prev.) Headline CPI +0.1% MoM (0.1% exp., 0.5% prev.) and +3.4% YoY (3.4% exp., 3.1% prev.) Italian confidence was broadly unchanged.
Scandinavia
Norwegian central bank governor Øystein Olson announced his retirement, 1 year ahead of the end of his 6-year term. This announcement was a surprise but as the Norges bank tends to be more model driven than others short to medium term changes are likely to be limited. Ida Wolden Bache is thought to be the best placed as a replacement if an internal candidate is sought. Core retail sales surprised to the downside -3.1% MoM (-0.4% exp., -0.1% prev.)
Swedish unemployment declined to +8.4% (9.2% exp., 9.5% prev.) and both consumer and manufacturing confidence remained high but retail sales dropped by -1.2% MoM (0.5% exp., -0.3% prev.) resulting in +5.4% YoY (8.5% prev.) 2Q GDP was as expected +0.9% QoQ (0.9% exp., 0.8% prev.) and +9.7% YoY (9.6% exp., 0.0% prev.)
UK
PMIs were expansionary but the composite and services declined, with manufacturing roughly unchanged.
Japan
Retail sales beat expectations, as consumers adapt to lockdowns, printing +1.1% MoM (0.4% exp., 3.1% prev.) and +2.4% YoY (2.1% exp., 0.1% prev.) and PMIs declined with the composite at 45.9 (48.8 prev.), manufacturing was still expansionary 52.4 (53 prev.) but services has now dropped to 43.5 (47.4 prev.) in line with the increase in lockdown restrictions.
Australia
PMIs dropped, impacted by the recent lockdown with the composite at 43.5 (45.2 prev.), services at 43.3 (44.2 prev.) and manufacturing at 51.7 (56.9 prev.). Retail Sales was also impacted, printing -2.7% MoM (-2.5% exp., -1.8% prev.)
New-Zealand
Retail sales (ex-inflation) was strong at +3.3% QoQ (2.5% exp., 2.5% prev.). This Q2 data is somewhat backward looking, but the details showed it was driven by housing related spending reinforcing the RBNZ’s current conundrum. On the other side consumer confidence dropped, most likely due to the recently imposed restrictions.
