By Michael Every of Rabobank

Pure Shakespeare

Stocks were down again as US yields and the dollar were up again. Not helping matters, the Fed's Beige Book said, 'mild stagflation'. Retail spending was flat to up slightly, but lower discretionary spending and heightened consumer price sensitivity; auto sales flat, with some incentives to spur sales; travel and tourism stronger, but with mixed outlooks; transportation mixed; manufacturing flat to up; housing up modestly; commercial real estate softer; energy stable; and agriculture mixed. The overall outlook was more pessimistic amid rising uncertainty and greater downside risks. Employment rose at a slight pace, with wage growth mostly moderate and several Districts reporting it at pre-pandemic historical averages or normalizing towards it. Prices increased at a modest pace as consumers pushed back, leading to smaller profit margins, and retail discounts were evident despite increases in input costs, particularly insurance, though with some falls in construction and raw materials costs. Price growth was expected to continue at a modest pace.