Have chocolate cake, will travel

Posted by: Paul Donovan

31 Oct 2019
  • Chile cancelled next month's APEC summit. This does not matter much (international summits rarely matter much). However, Chinese President Xi and US President Trump were expected to share a slice of the most beautiful chocolate cake the world has ever seen and do a trade deal. They can still do a trade deal elsewhere, but markets now have less certainty over timing.
  • US Federal Reserve Chair Powell (a lawyer, not an economist) seems relatively certain about a trade deal. The Fed cut rates last night, as expected, and signalled that this may conclude the easing cycle for now. Expectations of better trade were part of this – although the upside from a trade deal is likely to be limited.
  • The Bank of Japan did nothing (masterfully) on policy overnight. There was more forward guidance about accommodation in the future. The Bank of Japan does not appear to share the Swedish Riksbank's skepticism about negative interest rates.
  • Spanish GDP is due out, after relatively good French GDP data yesterday. The US offers personal income and spending data. The consumer remains critical to economic growth. Income data is increasingly useful, as in the modern gig economy people get income from more than wages.

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