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Trade talks not taxes

| Posted by: Paul Donovan | Tags: Paul Donovan

US Treasury Secretary Mnuchin has been musing on the delights of a taxpayer financed trip to China at some point. The idea would be to discuss trade. This, along with the lack of detail about Trump trade taxes on another USD 100bn of goods partially made in China, is feeding market hopes of a deal being struck.

The UK's weekend media was alive with speculation that the UK will stay in the EU customs union. There was also speculation that such a decision might trigger the resignation of Foreign Secretary Johnson. That is not necessarily seen as an obstacle to remaining in the customs union.

Today markets are entertained by the release of purchasing managers' sentiment data. Since 2010, the correlation of the German manufacturing production PMI with actual German manufacturing production has been zero. In other words, a rise in the PMI means that production could go up, or it could go down. 

Japanese Prime Minister Abe's approval rating was reported below 30% in another opinion poll over the weekend. An average opinion poll approval below 30% is considered a threat to Abe's leadership (the average is still above 30%). The leading contenders to replace Abe would probably be more fiscally conservative.