Daily update
Daily update
- Any economist asked to assess the economic and market outlook can only offer a deep sigh of resignation. As with earlier trade deadlines, US President Trump has again extended the deadline for opening the Strait of Hormuz. However, the consequences of war deadlines are more serious than those of trade.
- If uncertainty dominates, markets lose the veneer of objective analysis and become mere casinos, so markets want to believe. However, Trump’s retreat might be buying time to build up troop numbers. Iran’s government seems to have increased control and become more hardline since the war began. Crude oil prices have not (so far) retraced their spike, suggesting traders require Iranian confirmation before pricing in Trump’s comments on talks.
- UK February retail sales were stronger than expected. Very strong January sales data were revised higher, boosted by online retail and artwork. UK tax data suggested strong income growth from self-employment and side hustles, implying official data might under-report activity, which allows consumers to outperform model predictions.
- US Michigan consumer sentiment data includes inflation expectations. These are not reliable. Using a three-month average (only partially including war effects), Republicans expect 0.8% inflation this year. Even without war or tariffs, that is too low. Democrats expect 4.5% inflation—above the OECD’s wartime forecast.