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Weekly Economic & Financial Commentary: What Shall We Do Now?

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Summary

United States: What Shall We Do Now?

  • Piecing together the implications of this week’s softer-than-expected inflation data with last week’s blowout nonfarm payroll report for the Fed’s policy path is top of mind for many. The FOMC has made it clear that it needs to see inflation slowing on a sustained basis before pivoting from its current stance.
  • Next week: Housing Starts (Mon.), Retail Sales (Tues.), Industrial Production (Tues.)

International: Lower U.S. CPI Fuels International Financial Markets

  • The U.S. dollar broadly sold off against foreign currencies, particularly emerging market currencies this week. Currencies across Latin America and EMEA rallied in the immediate aftermath of the July U.S. CPI print and sustained those gains over the second half of the week.
  • Next week: Canada CPI (Tues.), German ZEW Survey (Tues.), U.K. CPI (Wed.)

Interest Rate Watch: The Great Flattener

  • On Tuesday of this week, the spread between the two-year Treasury yield and the 10-year Treasury yield reached -50 bps, the largest inversion between the two securities since 2000. What is driving this move, and what does it tell us about future economic conditions?

Credit Market Insights: Running a Tight Ship

  • The Fed released its Senior Loan Office Opinion Survey for Q2-2022 last week. Surveyed banks pointed to the beginnings of tightening in lending standards and plans to continue to tighten throughout the rest of the year. Demand for credit card loans rose as consumers continue to spend amid blazing inflation.

Topic of the Week: Mind the Gap: New Evidence Suggests Early Emergence of Gender Wage Gap

  • Recent data released by the Department of Education suggests the gender wage gaps form almost immediately upon workforce entry. These findings provide color and insight into our continuously evolving understanding of wage disparities among gender.

Full report here.

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