Should US rates be higher or lower?

Posted by: Paul Donovan

19 Nov 2019
  • Yesterday, a lawyer, a real estate developer and a film extra sat down to discuss economics. (US Fed Chair Powell, US President Trump and US Treasury Secretary Mnuchin met). The Trump Twitter Feed declared the meeting "very good." Negative rates were mentioned. The US president often mentions negative rates.
  • The Trump Twitter Feed also declared US interest rates should be lower than other interest rates, because it is the US. As the world's reserve currency, there is an argument for lower US interest rates. Falling trade volumes weaken that argument. The ballooning US current account deficit and budget deficit also argue US interest rates should be higher than elsewhere. Fed President Williams (an economist, not a lawyer) speaks today.
  • The Great British public are fascinated by an unfolding political drama - everyone is watching "The Crown" on Netflix. Obviously no one is watching the UK general election. Prime Minister Johnson and Leader of the Opposition Corbyn debate head to head tonight. Johnson has never won a televised debate. Corbyn has never lost a televised debate.
  • The data calendar is dreary. The Eurozone current account might raise a flicker of interest with US auto tariff threats (of which there is still no news).

Explore more CIO Daily Updates