Thursday is trade taxation day
- US President Trump is expected to announce details of tax increases on US consumers of steel and aluminum today. Exemptions for consumers of Canadian and Mexican product have been offered (the largest and fourth largest exporters to the US, respectively). This raised hopes that consumers of European product may also be exempt (the second largest exporter).
- The eleven nations of the Trans-Pacific Partnership are to sign a preferential trade deal today. As a preferential deal, those excluded from the TPP or those who have withdrawn from the TPP will be at a relative disadvantage in trading with members of the TPP.
- China's February trade surplus was larger than expected. The lunar new year distorts this data, and it should not be taken too seriously. In the world of Twitter, however, spin rather than substance dominates. The timing could perhaps have been better.
- The US Federal Reserve's Beige Book indicated economic conditions support neither negative real rates, nor an emergency quantitative policy. The Fed is responding appropriately. We expect four rate increases this year. Eurozone economic conditions support neither negative real rates nor an emergency quantitative policy. The ECB is unlikely to respond appropriately today.