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Time to cut

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The US is cutting – at least, US President Trump wants to cut. An "America First" mini-budget today proposes significant cuts to pay for defense and domestic security. Investors are focused on the Congressional reaction – if Congress resists, investors may doubt some of the other content of the Trump Twitter feed.
  • The US Federal Reserve did not, obviously, cut rates. Yesterday's increase was well signaled. However, the press conference and statement seemed aimed at validating expectations for two further rate increases, while signaling little intention of accelerating the pace of tightening.
  • The Dutch election results produced a relatively strong result for pro-EU forces on an extremely high voter turnout. Perhaps the most predictable consequence has been media attempts to extrapolate from this into other European elections (which would be unwise). The result again raised questions over the signals of opinion polls.
  • China's central bank raised interest rates overnight, in a move that is not really of much interest outside of China. The Bank of England meets today on policy (with a cameo appearance from outgoing deputy-governor Hogg), but no change is expected.