Good Friday AM,

No data yet again so markets are left to their own devices.

Equities are doing ok, bonds not so ok with, eh, 10-yr leaking back midway into the current trading channel at 3.75%. I didn’t like the lull in the US data this week as it gave bonds an opportunity to focus elsewhere and leak higher in rate. Next week will be all about the US with CPI, PPI and the Fed meeting. Being an optimist, I am looking for positive moves in rates next week with an improvement of at least .25%. We will see if my tea leaves are right soon enough.

Some interesting economic notes below here and in China as their production and export slowdown will have big repercussions worldwide.

First-time applications for unemployment benefits last week posted their biggest one-week jump since July 2021 and rose to their highest level since October 2021. Jobless claims data can be volatile week to week–especially around holidays like Memorial Day–but the numbers so far this year could be giving an early sign that more workers are getting laid off as the labor market cools.

As Western central banks continue to jack up interest rates in an effort to douse stubbornly high inflation, China faces a growing risk of the opposite problem—deflation. Prices charged by Chinese factories tumbled in May at their steepest annual pace in seven years, while consumer prices barely budged. Economists say the absence of inflationary pressure means China could experience a spell of deflation—a widespread fall in prices—if the economy doesn’t pick up soon. Chinese policy makers will likely need to do more to stave off that risk and get the economy motoring again, economists say, perhaps by trimming interest rates, weakening the currency or offering cash or other spending inducements to households and businesses.

Please remain safe and stay healthy, enjoy the weekend and first, make today great!