Private-sector activity in the euro area unexpectedly shrank for the first time since the pandemic lockdowns of early 2021 as record inflation curbed demand across the economy -- adding to fears that a recession is on the horizon. A survey of purchasing managers by S&P Global dropped to a 17-month low in July, dipping beneath the level that signals contraction. The downturn was driven by worsening output among manufacturers and a near-stalling of service-sector growth. Economists had expected a mild expansion.

함의: 완만한 확장세를 보일 것으로 예상했던 것과 달리 유로존 경기는 17개월래 최저치로 수축됨.

Earnings misses continue to roll in, rattling traders. Tumbling social media companies are blaming macroeconomic conditions for surprisingly poor results, pressuring tech giants who’ve yet to report, like Alphabet and Meta. Twitter and Snap -- which is plunging ~30% ahead of the bell -- both cited slowing advertiser spending, pegging the disappointment to broad economic worries. Twitter, of course, also mentioned the battle over Elon Musk’s deal. Notable misses after the bell came from S&P 500 members Intuitive Surgical, Seagate -- which cited cited macro-related challenges and plans to trim production, and which is weighing on other tech stocks -- and bank SVB Financial, which is uniquely exposed to Silicon Valley. All three are down ~10%.

함의: 예상치를 하회하는 실적이 연속되며 아직 실적을 발표하지 않은 대형 기술주에 불안을 갖게 할 뿐 아니라, 열악해지는 거시경제 환경을 원인으로 지목하는 경우가 많음.

Stocks and bonds have rallied together as traders bet policy makers will capitulate on interest-rate increases as the risk of a recession rises. It’s premature for that conviction as the fight against inflation is far from over and will keep the Fed going unless there is real distress in the economy, which we’re not seeing yet. A 75-bps hike is still a done deal next week, fed funds futures show, but the FOMC will stop in February 2023 after taking rates to just under 3.5%, they suggest. The risk of a recession will then lead to a cut in March, or so pricing says.

함의: 경기침체에 중앙은행이 굴복할 것으로 베팅하며 주식, 채권이 랠리를 하고 있음.

US business activity contracted in July for the first time in more than two years as manufacturers and service providers signaled sluggish demand that only adds to heightened recession anxieties. The S&P Global flash composite purchasing managers output index slid 4.8 points to 47.5, the weakest reading since May 2020, the group reported Friday. Outside of the early months of the pandemic, the July figure is the weakest in data back to 2009. Readings below 50 indicate contraction. The new orders gauge expanded modestly after contracting the previous month.

함의: 유럽과 마찬가지, 미국도 수축국면에 진입함.

Treasuries rallied sharply after data showing a contraction in US business activity for the first time since 2020 heightened fears the economy will plunge into a recession. The slide in bond yields gathered pace on Friday, with the weak economic reading spurring bets the Federal Reserve will reduce the size of rate hikes to half a point in September after an all-but-certain 75-basis-point increase in July. The 10-year yield sank below 2.8. “There is no denying that the economy is decelerating,” said Gregory Faranello, head of US rates trading and strategy at AmeriVet Securities. “If it continues, there is a prospect that the Fed pulls back its pace of tightening once it goes 75 next week.”

함의: 지난 밤 채권의 급격한 상승은 2020년 이후 첫 위축에 접어든 미국 경제활동 데이터를 통해 7월 75bp 인상 후 9월은 50bp 인상으로 속도를 늦출 것이라는데 대한 베팅이었음.

Former Treasury Secretary Lawrence Summers said that Washington is forgoing a key tool in helping the Federal Reserve quell inflation, and urged that lawmakers look at raising taxes. “Fiscal policy makes a big difference,” Summers said on Bloomberg Television’s “Wall Street Week” with David Westin. “Just the right thing to do is to raise taxes right now to take some of the demand out of the economy." Summers said that any tax hikes shouldn’t go toward funding fresh outlays -- in contrast to the package of tax hikes and expanded social investment that President Joe Biden has sought from Congress for more than a year now.

함의: 전 재무장관은 증세를 통한 수요억제로 인플레이션을 통제할 수 있음에도 정부가 사용하지 않고 있음을 지적함.

We estimate that dollar appreciation since mid-2021 has reduced the Fed’s preferred inflation gauges -- the headline and core PCE deflator -- by just 0.1 ppt (on a year-on-year basis) so far. The peak effect, of close to 0.2 ppt, will arrive early next year. The Fed will likely welcome any inflation relief they can get, but with headline PCE inflation likely ending the year at 5.9%, that amount of disinflation is a drop in the bucket. On growth, using the Fed’s trade model we estimate the deterioration in the trade balance from dollar appreciation will knock 0.7 ppt off GDP growth this year. Those numbers likely underestimate the total hit, as rapid dollar appreciation in the past has usually led to a tightening in global financial conditions that significantly slows growth and further drags on demand for US exports.

함의: 달러 강세를 촉발시킨 통화정책, 이를 통한 인플레이션 하락은 최대 -0.2ppt지만, 달러 강세로 인한 무역 열위 등에 의한 성장률 하락은 -0.7ppt임.

The Sahm Rule, a reliable indicator of contemporaneous recession since 1950s, says a recession usually begins when the national unemployment rate’s three-month moving average rises by 0.5 percentage points above its low from the past 12 months. The unemployment rate has lingered at 3.6% for the past four readings, suggesting the economy is not in a recession. Although the near-term models currently are sending a benign signal, that could change quickly. Historical experience is that economic variables tend to behave in a nonlinear way at the onset of a recession. Our model-predicted recession probabilities in the near-term tend to spike when the underlying data cross certain thresholds. The model sees a recession risk above 50% for 4Q 2022 in the following scenario: Corporate profit margins fall below 10%, from the current 11.7%. The Fed raises interest rates to 3.5% quickly. Year-on-year nominal GDP growth slows to below 6%.

함의: 경기침체를 잘 판단하는 클라우디아 삼의 모델을 통하면 아직 침체로부터 멀지만, 침체 전 지표들은 비선형으로 움직이는 경향이 있기 때문에 안심할 순 없음. 참고로 올해 4분기 침체 확률이 50% 이상이 되려면 기업 이익률이 10% 미만으로 하락, 중앙은행이 3.5%까지 빠르게 금리인상, 명목경제성장률 6% 미만으로 하락임.

Our US inflation-risk model predicts inflation topped out at 9.1% year over year in June and will fall back to 7% by the first quarter of 2023. A gradual slowdown toward 5% may follow later next year.

함의: 인플레이션은 내년 말이 되서야 5%에 닿을 것임.

Some global money managers betting on China stocks are taking July’s selloff in their stride, keeping the faith that Beijing will pull out all the stops to boost the economy. Fidelity International Ltd., abrdn plc and GAM Investment Management are among those expecting China to outperform global equities in the second half as recession fears grip major markets. For heavyweight tech firms traded in Hong Kong, Federated Hermes Inc. and Brandes Investment Partners LP say the worst of the crackdown is priced in. China and Hong Kong shares have seen their world-beating rebound fizzle out in July as rising virus cases, mortgage boycotts and fresh regulatory action on internet giants triggered knee-jerk selling. But to bulls, a gradual reopening from lockdowns, wrapping up of the regulatory probe into Didi Global Inc. and hopes of market-friendly measures leading up to the all-important National Party Congress are reasons to be optimistic.

함의: 7월 매도에 의한 낙폭에도 불구 경제활동 정상화, 기술 기업 규제의 마무리 국면, 전당대회에 대한 기대 등을 이유로 일부 투자자들은 여전히 중국이 하반기 가장 우월한 성과를 낼 지역으로 보고 있음.

British satellite firm OneWeb is nearing a deal to combine with France’s Eutelsat Communications SA in a transaction that would create a pan-European operator that could better compete with Elon Musk’s Starlink project, according to people familiar with the matter. OneWeb and Eutelsat could reach an agreement as soon as next week, the people said, asking not to be identified because the discussions are private. OneWeb, in which the UK government has a minority stake, would be valued at about $3 billion or more, the people said. Musk’s Starlink fleet of more than 1,500 satellites launched in the past three years by SpaceX has created an unprecedented challenge for rivals, leading to a wave of consolidation in the sector.

함의: Space X가 쏘아올린 1,500여개의 위성은 동종 업계에 위협이 되었고, 전통 기업들은 합병을 통해 스타링크와의 경쟁에 대응코자 함.

Russia attacked Odesa’s sea port with cruise missiles on Saturday, less than 24 hours after signing an agreement aimed at restarting Ukrainian grain exports from Odesa and two other Black Sea locations. Two Kalibr missiles hit the port’s infrastructure and two were shot down by Ukraine’s air defense, Serhiy Bratchuk, adviser to the head of the Odesa regional military administration, said on Telegram. The extent of damage to grain loading facilities was unclear. A large plume of smoke was visible across the city after the strikes. 

함의: 러시아는 오데사와 다른 두 지역에서 곡물 수출을 할 수 있도록 한 협정 24시간도 지나지 오데사 항구를 공격, 곡물 적재소의 피해는 불명확하나 미사일 2기는 격추되고 2기는 피해를 입혔음.

WHO Declares Monkeypox Outbreak an International Emergency.

The bond market wants to believe that Federal Reserve boss Jerome Powell will succeed in getting inflation under control. It’s unclear just when the economy might witness an actual slowdown in consumer-price gains, which are presently running at the fastest pace in four decades. But as investors brace for the Fed’s next hike on Wednesday, bond-market measures suggest the traders’ outlook for inflation has been tempered and is back where it was in February, before the Russia-Ukraine war turbocharged commodity prices and exacerbated global supply-chain problems. That’s also encouraged investors to bet the Fed may end interest-rate increases earlier and at a lower level than previously thought. A key gauge of investors’ inflation expectations, known as the five-year, five-year forward breakeven rate, on Thursday fell to 2.02%, just beneath where it stood on Feb. 18 and the lowest closing level since early 2021. And while it rose Friday, the rate is well below the 2.57% mark hit back in April and much closer to the rate of 2% that the US central bank tries to anchor policy around.

함의: 채권시장은 파월이 인플레이션 통제를 성공하길 바라는 눈치로, 어느새 물가기대가 2월 18일 수준인 2.02%로 하락하며 중앙은행의 목표치인 2%에 근접함. 다만, 채권시장에는 중앙은행이 금리를 올린 뒤 당초보다 빨리 인하 사이클로 돌아설 것이란 베팅도 녹아있음.