VP Weekly Wrap - 14 August 2026

Benign, for now - Aug. G3 Leading Indicator Watch

(10 August)

• The US growth outlook remains steady with manufacturing strength the key tailwind, while the main headwind is the inflation-induced hit to consumer disposable incomes. The labor market is neither recessionary nor inflationary, despite the noisy NFP data.
• Chinese domestic demand remains weak, with both new orders and new export orders dropping last month. We add a long EUR vs short CNH trade idea.
• Our Eurozone growth LEI recovered this month, while inflation risks remain. We now see upside risks for Eurozone nominal growth, while abnormally low levels of natural gas inventories create stagflationary tail risks for the winter.

Section Summary

• Global: Growth steady, already past peak inflation impulse
• US Growth: Steady outlook, manufacturing recovery remains strong
• US Labor: Still not inflationary nor recessionary, ignore the NFP noise
• US Consumer: K-shaped consumer drawing down savings as real incomes decline
• US Inflation: Inflation fears overstated, as core inflation trends remain subdued
• China Economy: Domestic demand remains weak as focus remains on exports
• China FX: Long EUR vs short CNH on growth divergence & mean-reversion
• Eurozone Growth: Growth LEI recovers, fiscal impulse remains positive
• Eurozone Inflation: Upside inflation risks remain, low nat gas inventories a tail risk for winter