A confidence hit
This isn’t the end of the week that investors had in mind when they were front-running Tuesday’s inflation report in anticipation of another deceleration in price growth.
The mood has turned far more pessimistic over the last few days, from the possibility of the much discussed “dovish pivot” from the Fed next week to a potential 1% hike and recession next year. That’s quite the shift on the back of one economic release but that’s the weight that investors had put on the report in the days and weeks before.
Is the UK already in recession?
The UK is right up there as far as bleak outlooks are concerned, with the cost-of-living crisis already hitting the economy hard. Of course, it could have been much worse if not for the cap on energy bills but today’s retail sales figures highlight how bad the situation already is, with some suggesting they’re indicative of an economy already in recession. Sterling traders seemingly agree, with the pound slipping to new 37-year low against the dollar.
A welcome rebound
The data from China was far more encouraging overnight, with retail sales, industrial production and fixed asset investment all comfortably beating expectations. That wasn’t enough to stop the yuan from trading above seven against the dollar or to convince anyone that the economy is back on track, but it’s a welcome rebound.
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