Ice Cream & Inflatable Bonds: October 17th-21st
Interested in keeping up with some of the hottest topics in global macroeconomics? I’m no expert and so I’ve decided to start publishing a short-and-to-the-point round-up from the lens of the common observer.
This week starts a bit gloomy, but the end comes with a few lighter topics that I think you’ll find interesting. Let me know your thoughts!
There are a lot of moving parts this week and we’ve already seen important developments. I’m not going to beat around the bush so let’s get right to it.
1. China withholds its GDP data for the quarter a day before its scheduled release.
No reason was given for this delay and the date was set well in advance. There is also no update on a future publication date for the time being.
This is taking place on the same week as the 20th National Congress of the Chinese Communist Party, a party held every 5 years. The party is known for being the time for the approval of the membership of the Central Committee and for processing any formal changes to the party’s constitution.
The lack of the release of GDP data as well as other economic indicators is creating uncertainty for investors and speculators worldwide. Considering heightened political tensions around the world and talks about potential collaboration between China and Russia, it makes sense to stay tuned in to any updates coming out of the National Congress this week.
No idea why China is holding back its numbers, but it may be safe to say that it is for political reasons.
2. United States President Joe Biden voices an absence of concern for the continued strength of the dollar.
Biden comments on the lack of growth and “sound policy” abroad to be the primary concern.
This comment is coming on the heels of the United State Department of Treasury asking banks whether or not the government should buy back bonds. Late last week, Treasury Secretary, Janet Yellen, expressed concerns about a rise of supply in Treasuries in the market.
“I’m not concerned about the strength of the dollar, I’m concerned about the rest of the world,” says President Biden.
Polished off with a, “Our economy is strong as hell.” just in case, the haters had anything to say about his take. Not sure if there was an intentional PR spin here or what, but the President happened to be eating an ice cream cone during these comments.
Biden has a lot to consider in regard to the strength of the dollar. On October 5th, OPEC+ decided to cut oil production by 2 million barrels per day against warnings from Joe Biden and the White House about the potential effects on the global economy.
The Saudi Foreign Ministry made “suggestions” that the United States asked the oil cartel to delay cuts in production by a month.
For anyone following the timeline of the midterm elections, that would be just in time for the democratic party to prevent any fuss from United States citizens about any increases in oil prices.
Not too long after the debacle with Saudi Arabia and OPEC+ and after an unexpected jump in CPI numbers Joe Biden came out and claimed that prices would rise if Republicans won the midterm elections.
A lot to watch here for the strength of the dollar as central banks around the world struggle to manage the consequences of its effects.
3. UK pension crisis is ready for a reaction.
If you haven’t been watching the hysteria around the bond markets in the United Kingdom, it is not a bad time to catch up.
The Bank of England stepped into to support the weakened bond market to save pensions from experiencing margin calls. This support to the UK’s bond market was scheduled to end on Friday but was announced to be extended.
Prime Minister Liz Truss fired also the Minister of Finance on Friday as she reversed the country’s plans to cut taxes.
Could the bond market in the UK have an effect on the strength of the dollar?
This will be a good week to watch for the UK bond market as investors react to the government’s interventions.
Dirty Deeds:
- Ukraine Launches a Drone Attack on Kyiv
- Sam Bankman-Fried, FTX US Subject to Probe by Texas Securities Regulator
- Starbucks Sued by Pro-Union Staff
Lighten Up:
