No longer Cut and Paste! New Normal!
If rates north of 5% aren't enough to slow the economy, there is possibility that US is in a new normal of having persistently higher rates Kashkari summed it up in his essay: current stance of monetary policy; may not be as tight as we would have assumed.
However there have been mixed signals.
Better ISM- but almost as many industries seeing contraction as growth.
Prices paid posted largest monthly percentage gain since 2012. (measures of breadth not magnitude)- however rate of job creation marginal- struggles retaining employees or replacing leavers. - not corroborating payroll number- One of these is out of whack. The question is, which?
SLOOS showed that through Q4, banks tightened lending standards - borrowers reluctant to borrow - bank lending may well turn negative soon-
Farmers' protests in Europe - brushed aside by markets - reflect anger over the rising prices & low wages. Weaker EZ PPI - Close below 1.0700 would easily test 1.0611, 76.4% of Oct/Dec up move -so far holds Dec's 1.0723 low.
One remembers how Miles Guo warned in 2021 that even if US, Europe & Japan gave China $100 trillion, it wouldn't be enough to save China's real estate and economy. But there is glimmer of hope with Xi getting into action - Week-long holidays start on Friday. That ramps up the pressure on policy makers - another view is that it would make sense to announce over the break, or at the end of the break for a reset of sentiment.
Pill: UK economic activity has been quite weak. Cautious consumers & cold weather cooled retail sales - 1.2524, 38.2% of 2023 range tested as expected - but held - downside opens below 200 dma 1.2561.
Japanese wage growth continued- but not enough to trigger imminent policy action. Household spending falls for 10th consecutive month. Stay long for 151.92.