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Peace in our time

| Posted by: Paul Donovan | Tags: Paul Donovan

  • China and the US have agreed not to increase taxes on their own consumers by avoiding tariffs for now. The agreement at the conclusion of trade talks was suspiciously light on details. The overall US trade deficit is likely to grow this year.
  • Italy, one of the wealthiest countries in the Eurozone, has a prospective government. The proposed prime minister is still secret, but a coalition of the two "anti-parties" intend to form a government defined by being against things. The coalition has a six-seat majority in the senate, leading investors to speculate on how long it will survive.
  • Japan's trade surplus was larger than expected in April. This is volatile data at this time of year, and not normally a focus. However, these are not normal times for international trade. Import data was weaker than expected, perhaps suggesting softer domestic demand.
  • Three speakers form the US Federal Reserve crowd the agenda today, and the minutes of the last FOMC meeting will be released on Wednesday. We expect tightening at the rate of a quarter point a quarter. This has to be one of the most benign tightening policies ever, but this is also the slowest recovery in post-war history.