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"Not-NAFTA" is not that interesting

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The details of the "not-NAFTA" deal have been given out. The economic implications are little to none. Not-NAFTA looks a lot like NAFTA. What the deal does do is reduce the risks to financial markets of trade being disrupted. Trade is far more important to equity markets than to the economy.
  • Eurozone producer price inflation is due. Some hints as to Eurozone exporters' reaction to US President Trump's trade taxes can be seen. If export price inflation for metal products stays steady, it will hint that the burden is falling solely on US consumers.
  • The interminably tedious process of separating the UK and the EU continues. There were rumors and denials that the UK might stay in the EU customs union to prevent a customs border splitting the UK. Sterling moved because clearly foreign exchange dealers have nothing better to do with their time than react to Brexit. Economists prefer watching paint dry.
  • Kaplan and Quarles of the US Federal Reserve make their way out onto the world stage, which might be worth a glance. The hike-pause-hike-pause rhythm of the Fed suggests a hike in December if nothing untoward happens as a result of trade taxes.