Daily update
Daily update
- The Federal Reserve obviously left rates unchanged, but the tenor of the meeting seems to have been a little more hawkish. Resilient economic growth has reduced the urgency for a rate cut. A cut is still likely at some point this year, not to act as a stimulus but to ensure against downside risk (were labor market fears to start to weigh on the consumer).
- US Treasury Secretary Bessent offered a defense of the strong dollar policy, which was about as effective as these things normally are (the dollar remains weaker). US President Trump’s social media comments about Iran have had limited impact on financial markets. This is partly because investors are no longer reacting to comments that only appear on social media, and partly because—regardless of the political and humanitarian implications—the economic impact of the situation in Iran is considered limited.
- European activity is quiet. Money supply data is due, and serves as a reminder that the ECB is only providing subdued liquidity at the moment (M3 money supply growth is well below pre-pandemic norms).
- US November trade data matters as a GDP input, but US importers’ eagerness to minimize their tariff liabilities means the data has been unpredictable. Factory orders data is due.