Fisher Investments recaps the biggest market, political and economic news from last week, including UK Q2 2021 GDP estimates, Japanese and Chinese July money supply (M2) growth and US July core consumer prices.
In the US, July core consumer prices (excluding food and energy) rose 4.3% y/y, in line with expectations, but only rose 0.3% m/m, less than anticipated. While headlines continue to tout inflation-related concerns, we believe stock and bond markets have been indicating for months that inflation would start trending toward normal. Although we still see some signs of post-lockdown discrepancies in July’s inflation data, in some ways we are already back at normal. For more, please see our 8/11/2021 commentary, “The Cool Down in July’s CPI Data.” On Tuesday, the US Senate passed a much-anticipated bipartisan infrastructure bill. However, the bill still needs to pass the House, which is currently in recess. It appears the House voting on the bipartisan infrastructure bill is dependent on whether the Senate also passes a proposed $3.5 trillion budget, which remains unclear. Ultimately, even if the infrastructure bill becomes law, we doubt the implications for the economy or stocks are as huge as many think. For more, please see our 8/10/2021 commentary, “On the Big Bipartisan Breakthrough.”
In the UK, the first estimate of Q2 2021 GDP growth was 22.2% y/y, slightly missing expectations, while the q/q figure was 4.8%, in line with the consensus forecast. June exports fell 1.5% m/m while imports rose 3.6% m/m. June industrial and manufacturing production increased 8.3% y/y and 13.9% y/y, respectively—both below consensus estimates. In the eurozone, June industrial production rose 9.7% y/y but fell 0.3% m/m, missing expectations. June exports and imports increased 23.8% y/y and 28.2% y/y, respectively.
In Japan, July money supply (M2) rose 5.2% y/y, slightly below forecasts. July bank lending increased 1.0% y/y. In China, July consumer prices rose 1.0% y/y, higher than expected. July money supply (M2) rose 8.3% y/y, lower than anticipated, while outstanding loans grew 12.3% y/y, in line with forecasts.
The Week Ahead:
The US, UK and China report July retail sales figures. The US releases July industrial and manufacturing production. The UK, eurozone and Japan report July inflation data. The eurozone releases its second Q2 2021 GDP estimate while Japan releases its first. Japan reports June retail sales, June industrial production and July trade data.
Source for all data cited is FactSet. This update constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice. No assurances are made we will continue to hold these views, which may change at any time based on new information, analysis or reconsideration. In addition, no assurances are made regarding the accuracy of any forecast made herein. Global equities are represented by the MSCI World Index. The MSCI World Index measures the performance of selected stocks in 23 developed countries and is presented net of dividend withholding taxes and uses the maximum rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. Past performance is no guarantee of future results. A risk of loss is involved with investments in stock markets.