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The two largest economies in the world will be providing their inflation numbers next week.
Normally, this would be a major event that would rile up markets. However, with monetary policymakers focusing on other things, the markets are likely to take the news report itself with relative calm.
What is likely to drive exchange rates and even the stock market at this point is expectations.
Like all countries, China engaged in some significant stimulus spending to deal with COVID. However, as a percentage of their GDP, it’s quite a bit less than in other countries.
Additionally, China’s stimulus has been in the form of focused infrastructure building, unlike broad liquidity injections in the US.
But despite the differences, consumer prices have broadly followed the same pattern around the world.
Where’s the Stimulus
The Fed’s policy projections factored in additional stimulus spending from the government.
It seemed the logical thing to do, but political priorities h...
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