Daily Commentary

MarketMinder’s View: Some positive news out of Europe’s largest economy, as preliminary data show Germany’s harmonized index of consumer prices (HICP) slowed to 2.0% y/y in June, beating analysts’ expectations for 2.2% and in line with the European Central Bank’s inflation target over the medium term. Mind you, this cooling is in line with the longer-term trend, not a surprise given money supply trends—in Europe and abroad—have hinted at slowing inflation for months. Inflation is everywhere and always a monetary phenomenon, and conditions are largely back to prepandemic norms. This is why we quibble with the notion in the conclusion that Germany’s ongoing disinflation rests on energy prices. For one, energy prices make up less than 10% of HICP (per the ECB), so we doubt oil price volatility alone could materially spike German inflation anew. Secondly, geopolitical conflict isn’t guaranteed to send energy prices soaring, either. Heck, global oil prices are down after an initial climb following the start of hostilities between Israel and Iran midmonth. In our view, these data simply add to a better-than-appreciated economic backdrop in Germany.

MarketMinder’s View: Well, this is encouraging: “According to a 2024 report from TIAA, which provides retirement planning services for employees in the education, health care and nonprofit sector, 20 percent of Gen Z-ers are saving for retirement. They’re also contributing to 401(k) plans at higher rates than millennials did when they first entered the work force, according to a 2023 Vanguard study.” Gen Z has some unique investing tools compared to prior generations, namely, technological advancements that can facilitate personal finance education. This piece is packed with some interesting data nuggets and interviews, and while anecdotes aren’t necessarily indicative of broader trends, the interest in investing from America’s youngest workers is a long-term positive. A major part of successful investing, in our view, is getting started early. Not hitting home runs or trying to get rich quick, but employing discipline and patience over the long term. For more, see Ken Liu’s column, “Personal Finance: It Isn’t an Elective Anymore.”

MarketMinder’s View: China’s factory slowdown continued in June. “The official manufacturing purchasing managers index for June–the first full month after the China-U.S. trade truce was reached in London–came in at 49.7, edging up from May’s 49.5 and matching the 49.7 tipped by a Wall Street Journal poll of economists, according to data released by the National Bureau of Statistics on Monday. A reading above 50 suggests an expansion in manufacturing while a reading below that suggests a contraction.” So fewer Chinese manufacturers reported contraction than in May, but a majority still contracted (though the magnitude isn’t known, as PMIs reveal the breadth of contraction only). Not great, but not surprising, either. President Donald Trump’s reciprocal tariffs have weighed on commerce between the two countries, though that doesn’t necessarily mean weaker demand overall—goods from China may just be making a few extra stops on their way to America. We don’t dismiss tariff-related headwinds, but for now, we have yet to see evidence of a material decline in trade activity above and beyond the pothole you would logically expect after tariff chatter pulled activity into early 2025—more data are necessary before we can conclude either way.