Klimakrise, Krieg und Pandemie bedrohen uns – wir leben aber weiter wie zuvor. Psychologe Bernhard Strauß erklärt, warum Menschen ihre größten Probleme am ehesten ignorieren.Bloomberg (gated) have polled analysts, finding that eight of the nine economists surveyed said Sunak would handle the economy better than Truss:
Truss has promised immediate reductions in taxes on companies and personal income, a measure that would probably stimulate the economy and boost inflation. The central bank, economists say, would probably respond by hiking rates, which are already at their highest point since 2009.
And, in the other corner:
Sunak has said he’d cut taxes only when the public finances are strengthened
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I’m not picking sides, but Sunak’s time as Chancellor, doing the bidding of current PM Johnson, was not impressive.
Liz Truss and Rishi Sunak are slugging it out. There is around 7 weeks of voting ahead. This will give the UK a new PM just in time for another winter of discontent; high inflation & high rates are a bleak backdrop.
This article was written by Eamonn Sheridan at www.forexlive.com.
Markets:
The bond market is signaling less fear about inflation and more about growth. Yields continue to fall dramatically in a sign that bonds have seen enough hiking to price out inflation with the growing possibility that a hard landing is on the way.
Most of the worries are focused on Europe but today’s US services PMI was the worst since 2009 aside from a few months during the pandemic. It was far below estimates and initially caused USD selling on fewer Fed hikes but eventually transitioned to a classic ‚risk off‘ move on worries about global growth.
That sent commodity currencies on a ride as they initially strengthen but then completely reversed to finish the day lower. The euro and pound were stuck in the same dollar rollercoaster as they initially benefited only to give it all back.
The steady winner was the yen as the market begins to envision the rest of the world back in the low-inflation, low-growth trap that the BOJ has been struggling with for decades. USD/JPY fell 100 pips but yen crosses fell further.
This article was written by Adam Button at www.forexlive.com.
On the week:
It was a disappointing day for the bulls but still an encouraging week.
This article was written by Adam Button at www.forexlive.com.
Each one aside from the UK disappointed.
But it wasn’t until the US release that risk trades began to suffer. Why?
The market actually wants to see some economic softness because it will mean lower inflation and, by extension, interest rates. However there’s a limit. Most of those releases look like a soft landing but the US print looks like a recession. I think the market would have been forgiving if that was a reading on manufacturing because it’s suffering from a pandemic boom-and-bust but services are supposed to be holding up.
My hope is that this chart is the real tell:
There’s pessimism and uncertainty in the air but corporate and household balance sheets are strong.
But at the moment, the market is looking at a higher probability of a hard landing. Europe is in energy crisis, China is stuck fighting a hopeless covid battle and the idea that the US was much stronger is being put to the test.
So who is the loser in all of that?
Counter-intuitively it’s the Australian dollar. It’s a country that’s highly-levered to the global economy, particularly demand for raw materials. If we do get a hard landing in the US, it bodes poorly for the rest of the world and we can see that in the reversal in AUD today.
One thing that has caught my eye is that copper prices are up 0.6% today. Generally copper is a great barometer of global economic growth. It’s fallen badly since early June and was at the leading edge of pricing in a slowdown but it has stabilized lately and that’s worth watching.
This article was written by Adam Button at www.forexlive.com.
They now project home resales to fall nearly 23% this year and 15% next year
in Canada, and the national benchmark price to drop 12.4% from
peak to trough by the second quarter of 2023.
A 12% drop would be larger than in any cycle over the past 40 years.
„Rising rates are squeezing housing affordability hard. By the time the
Bank of Canada is done, RBC’s aggregate affordability measure could
easily be at it worst-ever level nation-wide,“ they write.
Many are worried the decline could be even worse with Canada scoring some of the worst metrics globally for home prices and after a 50% rise during the pandemic. However RBC says it will be a correction, not a collapse.
„While a more severe or prolonged slump cannot be ruled out, we expect
the correction to be over sometime in the first half of 2023—lasting
approximately a year—with some markets likely stabilizing faster than
others. Solid demographic fundamentals (including soaring immigration)
and a low likelihood of overbuilding should keep the market from
entering a death spiral,“ the write.
Of course, no matter what the set of facts, would you expect the country’s biggest bank to forecast a housing collapse?
Read the report here.
This article was written by Adam Button at www.forexlive.com.