Weekly economic & financial commentary

Summary

United States: Slow Week of Data Shows Similar Themes

• Data from the Job Opening and Labor Turnover Survey for July indicated that the labor market was tighter than other measures may suggest. While the July JOLTS data are a bit dated, given the evolution of the pandemic over the past two months, initial jobless claims have continued to come down and reached a post-pandemic low the week of September 4.
• There have been some very tentative signs of improvement on the COVID front, but respondents in the Beige Book indicated that supply chain problems remain, and this morning's Producer Price Index report showed that businesses continue to pass on higher prices from operating in this difficult environment.
• Next week: CPI (Tuesday), Industrial Production (Wednesday), Retail Sales (Thursday)

International: Sturdy Eurozone Growth Prompts a Moderate European Central Bank Policy Tweak

• The full details of Eurozone GDP Q2 GDP confirmed a sturdy recovery as GDP growth was revised up to 2.2% quarter-over-quarter, while consumer spending jumped 3.7%. The solid rebound prompted the European Central Bank to announce a moderate slowing in the pace of its bond purchases at this week's monetary policy meeting.
• Next week: China retail sales and industrial output (Wednesday), U.K. CPI inflation (Wednesday), Australian employment (Thursday)

Interest Rate Watch: Nominal versus Real Rates in the United States and Europe

• Tighter monetary policy by the Federal Reserve may push U.S. yields higher compared to Europe, but these higher yields must be viewed through the lens of U.S. inflation that is likely to be much higher than European inflation for the foreseeable future.

Topic of the Week: Delta Crashes the Back to School Party

• The return to in-person learning meant this fall's back-to-school shopping season was viewed as an opportunity for consumers to splurge on items that were not needed during remote learning last year. But since Delta variant has thrown a wrench in many of our plans, back-to-school shopping is likely a prime example of the uptick in cases weighing on spending as consumers are in wait-and-see mode.

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