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Oiling up

| Posted by: Paul Donovan | Tags: Paul Donovan

The oil price is at levels not seen since 2014. Political concerns, rather than shifts in economic expectations, seem to be the cause. All things being equal, a rise in oil prices simply shifts wealth from oil consumers to oil producers. However, all things are not equal, and the rise in the oil price may impact US consumer behavior and inflation expectations.

Media reports suggest that the EU is to reject UK proposals for the Northern Ireland border - a part of the ever tedious exit from the EU. This was not expected to be easy, so markets may not react too much. However, Bank of England Governor Carney seems to be suggesting politics might delay a rate hike in the UK. Markets have reacted to that.

The US administration is apparently contemplating declaring an national emergency in order to limit Chinese investment in technology. US President Trump's economic policies have been skewed towards increasing the current account deficit. Constraining capital inflows at the same time may not be a dollar positive move.

The IMF spring break continues in Washington, and affords assorted finance ministers and officials every opportunity of appearing in the media with profound (if profoundly uninteresting) policy statements.