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Phony trade war?

| Posted by: Paul Donovan | Tags: Paul Donovan

  • US President Trump's taxes on US consumers of steel and aluminum have now been significantly diluted. Around two thirds of the steel tax, and over half the aluminum tax have been suspended. The Trump tax on trade will now add less than three cents to the price of a six-pack of Budweiser (if the tax is passed on to consumers).
  • US Treasury Secretary Mnuchin is "hopeful" of a deal with China. The trade war is increasingly looking like a phony war. Even if US trade policy is more spin than substance, increasing uncertainty does have implications for markets. Friday's budget veto hokey cokey dance was also unsettling for investors. Market volatility is therefore likely to continue.
  • Final Dutch and French GDP for the end of 2017 are due. Markets tend to ignore this data, in spite of it having superior quality to the initial data release.
  • There are a few central bank speakers. The ECB and the Bundesbank's Weidmann may offer an antidote to the addiction to easing. With the debate about how, not if, the ECB ends its bond buying, this is relevant. Dudley and Mester of the US Fed are also on the agenda.