Benign For Now

Aug 16, 2026

This week’s charts and research highlights from Variant Perception.

Chart of the Week

Low customer inventories relative to manufacturer inventories indicate potential for future orders and inventory builds from customers

(10 August)

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

Chinese export surplus remains the most important factor driving global imbalances.

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