Politics in markets, again

Posted by: Paul Donovan

15 Oct 2019
  • US President Trump has announced sanctions and trade taxes against Turkey. The Turkish lira weakened a little, but the measures were not as broad as had been expected. Markets may focus on the US political reaction. Trump has been criticized by both Republican and Democrat members of Congress over the Syrian policy. Republican criticism of the president is relatively unusual.
  • The EU suggested that the interminably tedious EU-UK divorce process may need more time (because it is interminable). However, the UK prime minister cancelled a cabinet meeting today to prevent leaks about the negotiations. This could be viewed as a signal of progress. Sterling remains somewhat disinterested. Economists remain profoundly fed up. 
  • US Treasury Secretary Mnuchin reminded investors that trade taxes will go ahead in December, absent a deal with China. Investors have become immune to this back and forth on trade. Trump tweeted that China had already begun agricultural purchases in advance of a deal. Chinese consumer price inflation rose 3% y/y in September on higher food prices.
  • Economic sentiment polls from ZEW are due for Germany and the Eurozone. UK unemployment is also due, and the Bank of England governor is speaking (neither will be a focus).