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Trade and the cost of living

| Posted by: Paul Donovan | Tags: Paul Donovan

The latest round of NAFTA negotiations conclude today. Markets are not prepared to price in the ending of NAFTA, but recent moves to tax US consumers via trade protection may be raising risks. A disruptive breakup of NAFTA would have implications for investment, trade and consumers' real disposable incomes.

Fed Chair Yellen's final FOMC meeting is this week, and ahead of that there is the release of personal income and spending data. This includes the PCE deflator, which is expected to come in at a +1.7% y/y rate. That is exactly in line with the long-term average for this inflation measure.

Saudi Arabia's anti-corruption program seems to be winding down. The issue for international investors is what will happen to the assets. If the government uses the assets taken in a different way, then there will be capital flow implications.

In the Eurozone, ECB member Nott has suggested that bond buying has done all that can be expected and should be stopped as soon as possible. This northern European attitude is not perhaps surprising. There is a real prospect that September will mark the end of the program.