Daily update
Daily update
- The sharp decline in gold and silver prices has relatively little economic significance. While attempts will be made to spin this as a reaction to fundamental economics, it seems more likely that the “fear of missing out” trade became exhausted. The run-up in prices was over too short a period to have created major wealth effects, so correcting to a price more in line with economic fundamentals would be regarded as an economic positive (avoiding a misallocation of resources).
- German December retail sales were stronger than expected, and (of course) the previous month’s data was revised stronger. Retail sales were revised up in 11 of the last 12 months. German—and European—consumers are sustained by rising real incomes (unaffected by any tariff-related price increases), and continue to support trend-like growth.
- The quarterly US Treasury funding announcement is not a market moving event, but it is a reminder of the state of US fiscal finances. While avoidance, planning, and carve outs have reduced tariff revenue, money was still raised. If some tariffs are ruled illegal, that will damage the US fiscal position further.
- Assorted business sentiment polls provide unhelpful background noise in markets. The Federal Reserve’s Bostic is speaking, at a time of increased division over policy.