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To TPP or not to TPP? That is the question

| Posted by: Paul Donovan | Tags: Paul Donovan

US trade policy became a little more muddled overnight. The Trump Twitter feed reversed earlier statements by US President Trump, and seemed to rule out re-joining the TPP preferential trade deal. There was also a casual swipe at the World Trade Organization. The US trade policy means US companies are at a competitive disadvantage against TPP companies. Muddled policy adds a risk premium to financial and real world investors.

Media reports suggest the US CIA head visited North Korean President Kim ahead of a possible summit with US President Trump. Markets do not really care (markets do not price in small fluctuations in extreme geopolitical risks).

The IMF has published its latest world economic forecasts, concluding with great precision that the global economy will grow 3.9% this year. Economists should not make detailed forecasts. They give an illusion of precision that is indefensible. Focus on the trends. Forget anything that happens after the decimal point.

Inflation data is due in the UK and the Eurozone. The UK numbers are seeing the limited boost from sterling's weakness fade from the calculation. Tax issues have been lowering Eurozone inflation (constant tax rate consumer price inflation has been higher) but these are ending.