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Navigating the Inflation Storm: Mixed signals from the US, Europe, and Asia

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What Happened Last Week?

  • US: The job market cools down, but inflation indicators nudge higher.

  • Europe: Money supply dips, signaling a complex battle with inflation.

  • Asia: China's manufacturing sector shows a glimmer of hope.

The US Economy: A Balancing Act

The US job market is at a critical juncture. The latest JOLTs (Job Openings and Labor Turnover) survey and nonfarm payroll data (refers to the total number of paid U.S. workers, excluding farm employees, government employees, private household employees, and employees of nonprofit organizations) conducted by the U.S. Bureau of Labor Statistics (BLS) indicate a cooling labor market, which could signify stability. The unemployment rate ticked up to 3.8%, but job creation continued at a steady pace. This could be the Goldilocks scenario that the Federal Reserve has been aiming for not too hot, not too cold.

Europe's Inflation Woes

The European Central Bank (ECB) faces a tough battle with inflation. Money supply across the region dipped for the first time since 2010, which according to economic theory, could lead to lower inflation. However, core inflation for August came in at 5.3%, hotter than expected.

Asia's Glimmer of Hope

China's manufacturing sector is still shrinking, but the latest PMI data shows improvement. This could indicate that the worst is over for the troubled Chinese economy.

Pathway to Knowledge

  1. Federal Reserve's Dual Mandate: Understand the Fed's role in ensuring maximum employment and stable prices.

  2. Global Economic Indicators: Keep an eye on critical metrics like the JOLTs survey, nonfarm payrolls, and money supply to gauge economic health.

The Week Ahead

  • Monday: Nothing major.

  • Tuesday: US factory orders, US ISM Services PMI.

  • Wednesday: Earnings from ChargePoint Holdings.

  • Thursday: Euro area GDP 3rd estimate, US initial jobless claims.

  • Friday: Earnings from Kroger.



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