Daily update
Daily update
- Events around Greenland have four main areas of market focus. Threatened US tariffs appear more serious than those relating to Iran, and may be overturned by the US Supreme Court. However, they imply US consumer prices of goods from the EU and UK will increase 4% to 10% (within about six months). This may reinforce the narrative of the US affordability crisis.
- Policy uncertainty is resurrected for US businesses. This has constrained investment and hiring, but might have faded as firms adapt. Uncertainty on this scale may again put US corporate activity on pause.
- In 2025, Europe generally avoided retaliatory measures, recognising the harm tariffs can do to the domestic economy. Targeted measures, including the restricting of US social media providers and other services, are now more likely. While numbers around the extent of European and UK investments in US securities might be exaggerated, the US dollar’s reserve status is likely to be under increased political strain.
- Home-country bias in UK and European defense spending is likely to increase further. Even if there is an expectation of different policies under a different US president in the future, defense projects outlast single political cycles. That the checks and balances of the US constitution allow this outcome today means it might be repeated.