Deal or no deal?

Posted by: Paul Donovan

04 Apr 2019
  • The enticing prospect of a US-China trade deal was dangled before the financial markets yesterday in an attempt to get equities to rally. The wild swings in equities over the past several months owe much to US President Trump's trade taxes. Trump is to meet the Chinese vice-premier today. Risks are biased. Keeping trade taxes, or increasing them, would be very badly received.
  • One consequence of the trade tax disruption has been delays to investment by companies around the world. That affects exports of products used in investment. Germany's factory orders data today may show some of that – Germany has been responsible for nearly all of the recent slowdown in developed economy manufacturing.
  • The ECB offers the minutes of its last meeting. Perhaps the only point of interest is around the attempts to avoid a hard exit from liquidity provisions for banks (the TLTRO).
  • The interminably tedious UK-EU divorce continues. The prime minister and the leader of Her Majesty's Loyal Opposition had "constructive" talks (we live in unusual times). The UK House of Commons voted in favor of a long delay to an exit, rather than a no-deal exit. The risk of no deal has fallen, accordingly.