Jam today, taxed tomorrow

Posted by: Paul Donovan

13 Aug 2020

Daily update

  • Global trade saw some action overnight. US President Trump has agreed not to increase taxes on US consumers of European products overall. The threat of trade taxes came from the dispute over Airbus subsidies. The good news is that this seems to recognize that increasing taxes on US companies and consumers at the moment is not a great idea. That might have a bearing in trade discussions with China.
  • The US has shuffled some of the trade taxes around. Thus, users of German meat mincing knives are to be taxed, as are consumers of French jams. US consumers of French jams may be unaware of the looming taxation, owing to their habit of calling jam "jelly".
  • Final German and Spanish consumer price inflation data is due today. Yesterday's US consumer prices were higher than some people had expected (though still very low in absolute terms). However, there is evidence of an unusually large number of prices falling, and an unusually small number of prices rising – suggesting that this is relative price shifts, not a general inflation move.
  • There are a couple of Fed speakers today. Markets are pricing central banks staying low for a long time, and the details around that are just noise.

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