The personal saving rate in 1Q18 was revised to 7.2% from a previously-reported 3.3%.

The largest and most persistent revisions occurred not in compensation but in proprietary & investment incomes. In other words, for the bulk of non-supervisory employees (over 80% of labour force), there has been (at best) only limited change

source: GS IR

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CHINESE TRADE BALANCE

China’s exports and imports both surprised on the upside in July

Demand for commodities remained strong, possibly in anticipation of higher infrastructure spending as government policy shifts to buttress the economy

Looking forward though, the outlook for China’s exports is grim in view of the escalating trade war. For a second time in two months, the U.S. will impose a new round of tariffs on Chinese imports in late August, with potentially more to come

⇒ UPSIDE TRADE SURPRISE DOESN’T MASK GRIM OUTLOOK

ECB ECONOMIC BULLETIN

Risks to global growth are growing as the risk of protectionism and the threat of higher U.S. tariffs sap confidence, the ECB said in a regolar economc bulletin

The ECB added that if all the threatened measures were to be implemented, the average U.S. Tariff rate would rise to levels not seen in the last 50 years

It added that even as external risks are mounting, domestic growth appears to be robust and near-term indicators point to a solid broad.based expansion

⇒ ECB SEES INTENSIFYING RISK FROM TARIFFS, PROTECTIONISM

JAPAN GDP

Real gross domestic product expanded 1.9% in quarter-on- quarter annualized terms in 2Q, reversing a 0.9% contraction in 1Q. That was above the consensus estimate of 1.4% growth

According to Bloombergs’ analists Japan’s growth will slow to more or less potential in 3Q, and will pick up in 4Q — enough to keep stoking inflationary pressures

U.S. CPI

While the July CPI results were in-line with expectations, the year-on-year change in the core reached a 10-year high

Without additional firming of labor inflation, doubts will remain as to whether this is sustainable

⇒ WILL THE ABSENCE OF CPI GOODS DEFLATION ENDURE?

source: Bloomberg

Important News

  • Chinese trade data showed that Chinese exports grew at a faster pace than forecast in July, experiencing little damage from the trade war thus far. In response to Trump’s recent threats, China matched them by announcing that $16bn worth of US imports would be hit with a 25% tariff
  • Turkey’s currency woes continued on Friday, with the Turkish lira falling to an all-time low. The currency lost over 10% on Friday morning, dropping 6.21 lira per dollar and for the week it has shed over 20%. It has come under pressure on concerns of the country’s ability to repay its foreign-currency debts

source: Bloomberg

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