Financial markets have continued to gravitate toward the ‘Goldilocks’ scenario where economic growth is neither “too hot” nor “too cold” and where inflation gradually moderates to more target-friendly levels. But while that view may have appeared overly optimistic a few weeks ago, much of the incoming data more recently appears to support this narrative. In our charts this week we focus on:
· Upbeat GDP data for Q2
· The messaging from August’s sentix surveys
· Ebbing US unit labour cost pressures
· Target-friendly inflation outcomes
· Inflation expectations and oil prices
· China’s soggy imports and PPI deflation
