Trick or treat?

Posted by: Paul Donovan

11 Apr 2019
  • The EU echoed to a familiar sound last night – the sound of a can being kicked down the road. The latest plan is that the EU will be cut off from the UK on a Thursday (Halloween), possibly earlier. Markets, UK consumers and the world in general really cannot be bothered to feign interest – although the rising risk of a UK general election may excite attention.
  • The ECB press conference had a dovish accent (because the accent was ECB President Draghi's). The view was that Europe's economy is performing as expected. US Federal Reserve minutes showed that patience does not signal the next US rate move is a cut. The IMF warned of the dangers of undermining Fed independence.
  • Trade taxes are a worry for the Fed. US Treasury Secretary Mnuchin was signalling that an enforcement mechanism is close to being agreed with China to cover any potential trade deal.
  • Chinese consumer prices rose – this is due to sick pigs (again), raising pork prices. European final consumer price data is due, but is not a market focus. US producer prices signal pricing power. With rising costs and the profit share of the economy falling a little recently, this is market relevant.