China opened the week with higher inflation numbers and very interestingly also announced a lower-than-expected volume of credit supplied to the economy. This had Chinese focused economists pairing back their forecasts of Q3 GDP and predicting easing being required going forwards. And at the end of the week reports of a major Chinese port shut due to the zero Covid policy also took their toll on sentiment.
Jun industrial production rolled over at -0.3% MoM (-0.2% exp., -1.0% prev.) and +9.7% YoY (10.3% exp., 20.5% prev.) with suspicion falling on supply restrictions. French 2Q unemployment was disappointing, but steady at +7.8% (7.6% exp., 7.8% prev.) and the German ZEW survey showed expectations and current conditions declining.
Norway Jun industrial production +0.9% MoM (-0.3% prev.) and +4.3% YoY (2.1% prev.) Jul CPI printed +0.9% MoM (0.8% exp., 0.3% prev.) and +3.0% YoY (2.9% exp., 2.9% prev.) with core CPI +0.6% MoM (0.4% prev.) and +1.1% YoY (1.1% exp., 1.4% prev.)
Sweden Both industrial production and orders declined, albeit from heady levels. Jul CPIF printed at +0.3% MoM (0.2% exp., 0.1% prev.) +1.7% YoY (1.6% exp., 1.6% prev.) with core CPIF printing a low, but expected 0.0% MoM (0.0% exp., 0.0% prev.) and +0.5% YoY (0.5% exp., 0.9% prev.)
Jul sentiment survey showed improving current conditions but a more disappointing outlook.
2Q GDP printed a healthy +4.8% QoQ (4.8% exp., -1.6% prev.) and +22.2% YoY (22.1% exp., -6.1% prev.). Jun industrial production cooled to -0.7% MoM (0.3% exp., 0.8% prev.) and +8.3% YoY (9.4% exp., 20.6% prev.) which was echoed in manufacturing production and construction output but offset by services.
The Jun Job openings survey showed more jobs available than had been lost in the pandemic at 10073k (9270k exp., 9209k prev.) and core CPI came in at a more reasonable pace, at +0.3% MoM (0.4% exp., 0.9% prev.) and +4.3% YoY (4.3% exp., 4.5% prev.) which was also echoed in the headline measure at +0.5% MoM (0.5% exp., 0.9% prev.) and +5.4% YoY (5.3% exp., 5.4% prev.)
The University of Michigan sentiment survey disappointed with an overall reading of 70.2 (81.2 exp., 81.2 prev.), current conditions 77.9 (83.5 exp., 84.5 prev.) and expectations 65.2 (78 exp., 79 prev.) This had a dramatic impact on the market causing a dramatic 8bp rally in interest rates. The survey’s measures of inflation expectations remained elevated, with the 1-Yr at +4.6% (4.6% exp., 4.7% prev.) and 5-10 Yr at 3.0% (2.8% prev.)
Many Federal Reserve participants made speeches advocating tapering the QE program with the only points of disagreement being the start date and pace.
Jul card spending declined, and volume of house sales contracted. 2Yr inflation expectation remained around target 2.27% (2.05% prev.) and Manufacturing PMI was strong, at 62.6 (60.7 prev.)