More politics, more politics – UBS

Today’s data calendar is so quiet, even ECB President Lagarde doesn’t seem to be talking. The lack of economic data to guide investors could be worrying, but recent market swings have not been based on rational economic analysis, notes UBS macro analyst Paul Donoban.

Feds summer camp for central bankers is coming

“Politics dominates the short-term market landscape. US President Biden will open the Democratic National Convention in Chicago. The focus is less on Biden’s remarks and more on Vice President Harris’ policy proposals. Of course, markets don’t necessarily assume that campaign rhetoric will become political reality.”

“The ‘price gouging’ problem of food retailers has attracted attention. US retailers’ profit ratios have risen from around 14% before the pandemic to just under 22% today (wholesalers’ profit ratios have remained around pre-pandemic levels, by contrast). Absolute price controls are generally considered useless by economists. Implementing competition and educating consumers can combat profit-driven inflation.”

“The Federal Reserve’s summer camp for central bankers is at the end of the week and we have minutes from the Fed’s last midweek meeting. Summer camp will probably be more of a focus. Fed Chairman Daly has signaled that a series of rate cuts are coming.”