Dominique and Ben review a busy week of economic data, exploring the specific supply shocks driving core goods and the implications of a major miss in retail sales. They analyse the relationship between slowing consumer income and labour supply, suggesting the Fed will maintain its focus on the unemployment rate rather than volatile, “noisy” consumption prints. While recent disinflation supports the doves for September, focus shifts to the upcoming FOMC minutes and reports that Chair Walsh may reduce the frequency of policy meetings to distance the Fed from “spurious” forward guidance. Dominique notes that the current data adjudicates in favour of the doves for the near term but maintains that hawks still see a need for a “risk management” hike to prevent a repeat of 2022.
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