Economic security

Posted by: Paul Donovan

08 Apr 2019
  • The resignation of the US homeland security secretary may not seem directly relevant for markets. If it is a signal of a tougher policy in immigration, it may matter. Near-term uncertainty about the Mexican border raises risks for NAFTA trade. That uncertainty has already affected corporate capital spending decisions.
  • German trade data is due, and as German exports are skewed towards investment goods this is relevant as a signal of global economic health. US capital spending plans are hinted at in the details of the (revised) durable goods orders data, and US factory orders are also due.
  • Global oil prices are in focus as military tensions in Libya persist. Libya is not a very large oil producer, but it enough to attract traders' attention. We see Brent crude at USD 70 per barrel in 12 months. The recent increase in oil prices is unlikely to have a major inflation impact as corporate pricing power otherwise still seems subdued.
  • The interminably tedious EU-UK divorce continues with the UK formally asking for another exit extension (the UK would participate in European Parliament elections). The French seem very concerned that the UK might use an extension to participate in EU decisions.