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US trade deficit day

| Posted by: Paul Donovan | Tags: Paul Donovan

  • US trade data is due for the month of May. Normally a minor event, the political focus on trade makes this a more important number. With over a third of the US tax cuts expected to be spent on imports, US policy is likely to widen the deficit over time.
  • The trade deficit matters because the US administration thinks that it matters. It is doubtful as to whether the typical American voter knows what the size of the deficit is.  Voters simply have the idea that a trade deficit is automatically a bad thing (it is not).
  • US President Trump signalled a possible retreat on opposition to Chinese investment in the US, talking about softer options for reviewing investment. Asian markets have not reacted very much. It may be that investors are cautious about putting too much faith in presidential pronouncements. The Trump Twitter feed was also sounding more hawkish on EU auto tariffs, and Harley Davidson.
  • Bank of England Governor Carney is due to speak (on financial stability) with growing expectations about possible interest rate increases. German Chancellor Merkel and Italian Prime Minister Conte meet ahead of the EU summit, with refugees a key concern.