Trade talks and fiscal timelines

Posted by: Paul Donovan

05 Aug 2020

Daily update

  • The US and China are to meet to review the phase one trade deal in the middle of the month. Global trade has been significantly disrupted, and the targets set in the deal have not been met. Markets are keen for the deal to continue – the US government imposing more taxes on US companies in the middle of a pandemic would generally be considered a bad thing.
  • US Treasury Secretary Mnuchin suggested that politicians should aim to agree on a fiscal package by the end of this week, and pass it next week. The differences between the various factions do remain significant. This timetable would presumably increase payments to the millions of American unemployed by the end of the month, but may reduce the fears of those in work more quickly.
  • Eurozone retail sales for June are forecast to rise somewhere between 1.5% m/m and 15.0% m/m (a nice, tight forecast range). The overwhelming majority of European adults had no decline in income during lockdown, and have been keen to spend their money once freed to do so. This translates into stronger GDP next quarter.
  • US international trade data is due, providing some context for the forthcoming trade talks with China.

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