Talking trade

Posted by: Paul Donovan

25 Aug 2020

Daily update

  • The US and China held talks on the phase one trade deal, which seem to have been positive. Markets have little expectation for a phase two trade deal, so this is a relief. The pattern seems to be of support for the trade deal, with more tensions over technology and the pandemic. Markets were expecting more hostile language ahead of the US election, so this is expected.
  • German "final" second quarter GDP was revised a little higher. Most economic data is likely to be biased to upward revisions, as initial estimates will fail to capture structural changes as people adapt to the crisis. The ifo business sentiment survey is due.
  • The UK's CBI gives a survey of retail sales – flawed as most surveys are these days. The UK was already quite far advanced in the move to online retail, and the pandemic has accelerated this. The main risk is that governments try to preserve a dying part of the economy through misguided nostalgia. High street retail will survive, but in a very different form.
  • Yet another survey from the US with consumer confidence. US consumers are more confident, supporting the bounce-back, but there may be an impact from the loss of additional unemployment benefits.

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