Following a week where risk assets rallied strongly in response to data indicating we are beyond peak inflation, last night’s interest rate cut by China’s central bank rekindled economic growth fears. China’s deepening real estate slump and zero-Covid policy weighed heavily on their July economic data and increases risks to the global economic growth outlook. One positive from this morning’s news is a sharp fall in oil prices – now trading at the lowest level since March.
This week’s economic data is highlighted by numerous data points on the U.S. housing market and Wednesday’s retail sales number. Earnings numbers out this week from several retailers, including Walmart, Home Depot and Target, will provide another look at the state of the U.S. consumer. Finally, Wednesday’s release of the Federal Reserve’s July meeting minutes may shed more light on how much additional tightening policymakers believe is necessary to fight inflation.
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