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Trade taxes, trade talks

| Posted by: Paul Donovan | Tags: Paul Donovan

  • There are a couple of central bank speakers on the calendar today. Bostic of the US Federal Reserve is speaking, but Bostic of the US Federal Reserve is always speaking. The remarks have little novelty value. 
  • Weidmann of the Bundesbank and the ECB is also due to speak. Although the ECB's policy path has been set out for the next year, the German economy has above-target inflation and greater risks of overheating than other economies. These remarks may get more market attention.
  • German producer price inflation is due. This is better at showing corporate pricing power than is consumer price inflation. It may give a sense of how companies are reacting to trade taxes – whether German exporters are absorbing the taxes (lowering prices) or passing them on to customers (producer prices unchanged).
  • The Trump Twitter feed was active over the weekend, but mainly about the Mueller investigation. Markets are not too concerned with this unless the investigation lowers US President Trump's political capital, or is seen impacting the mid-term elections. There is a theory that the US president increases protectionist talk when there is more media focus on the Mueller investigation. China and the US have trade talks this week.