Daily update
Daily update
- Markets are unsettled by a fire at an Emirati nuclear power plant, caused by an unidentified drone. US President Trump posted on social media about Iran using capital letters, and Iranian media are clear that Iran does not see an imminent US deal. Oil prices are still well below levels required to match supply and demand (without using reserves). Separately, media reports progress on a UK trade deal with Gulf states—not relevant immediately but important when reconstruction and rearmament budgets start to be spent.
- China’s April retail sales and industrial production data were weak. Retail sales essentially stagnated (mediocre domestic demand has plagued China for some time). Industrial production grew less than expected—oil intensive sectors dragged down the number (possibly a deliberate policy), but sectors serving global demand like autos and electronics saw faster growth.
- The far right made gains in local Spanish elections in Andalucia. Alongside far right gains in the UK, this reminds investors that current economic conditions encourage scapegoat economics and prejudice politics. That increases political polarization, complicating the pricing of political risk.
- Assorted central bank speakers are due. Without insight into second-round inflation effects, it is hard to make informed comments on policy direction. Uninformed comments are, of course, still possible.