I know where I’m getting out before I get in. — Bruce Kovner

1. Chinese Exports Fall at Steepest Pace Since February 2020 — China’s exports to the rest of the world tumbled in July, adding to the challenges for the world’s second-largest economy and offering fresh evidence that a drying up of Western demand is hurting Beijing’s attempts to rekindle growth.
After a short-lived rebound in the spring, goods exports from China resumed a long-term slide that dates to October last year, when consumers in Western developed countries began shifting their spending away from buying furniture and electronic gadgets, and instead diverted it toward services such as entertainment and dining out.
Worsening geopolitical tensions between Beijing and the U.S.-led West have also prompted some Western manufacturers to reduce their reliance on China’s supply chain, which in turn is expected to erode trade ties between the two sides.
2. Biden Restricts U.S. Investment in China — the U.S. will prohibit Americans from investing in some Chinese companies developing advanced semiconductors and quantum computers starting next year, escalating Washington’s efforts to prevent Beijing from producing cutting-edge technology for its military.
President Biden on Wednesday issued an executive order creating the rules after months of deliberations. The move could unsettle fragile efforts to rekindle diplomatic relations with China. Officials in Beijing have railed against U.S. policies restricting access to advanced technology, as tensions between the two superpowers have contributed to slowing U.S. direct investment in China.
3. Inflation Picks Up but Modest Price Pressures Could Encourage Fed to Hold Rates Steady — The consumer-price index, a measure of goods and services prices across the economy, rose 3.2% in July from a year earlier, up from 3% in the year through June, the Labor Department said Thursday. So-called core prices, which exclude volatile food and energy categories, rose by 4.7% in July from a year earlier, a slight cooling from June’s 4.8% increase.
The monthly figures, however, offered a more encouraging picture of current price trends. The CPI rose a mild 0.2% in July, same as in June. Even better, the core CPI also increased just 0.2% in both months, suggesting inflation isn’t starting to resurge. Fed officials focus on core inflation because they see it as a better predictor of future inflation than the overall inflation rate.
4. Wholesale prices rose 0.3% in July, higher than expected — The producer price index, which gauges the costs that goods and services producers receive for their products as opposed to those that consumers pay, rose 0.3% for the month, the Bureau of Labor Statistics reported Friday. That was the biggest monthly gain since January and up from a unchanged reading in June. Excluding food and energy, core PPI also increased 0.3%, the biggest monthly increase since November 2022 after falling 0.1% in June. Core PPI rose 2.4% on a 12-month basis, tied for the lowest since January 2021. On a year-over-year basis, headline PPI was up just 0.8%. Prices excluding food, energy and trade services moved up by 2.7% on an annual basis, unchanged from June.

The week ahead — Economic data from Econoday.com:

This entry was posted on Monday, August 14th, 2023 at 2:13 pm and is filed under Weekly Summary. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.