Daily update
Daily update
- UK first quarter GDP was stronger than expected, led by the consumer. As elsewhere, consumers have reduced savings rates to afford higher oil prices. UK consumers can also adjust oil demand via flexible working and online retail. Politics is overshadowing economics, with a possible challenge to Prime Minister Starmer. Former deputy Labour leader Rayner was cleared of tax wrongdoing, increasing the chances of a challenge. However, any change of leadership is not likely to substantially change fiscal policy.
- US April retail sales should also signal consumer resilience even as fuel prices soared. This data does not adjust for inflation and higher prices automatically raise the sales values, but use of savings should also support non-oil sales values.
- Federal Reserve Chair nominee Warsh, who publicly denied being US President Trump’s “sock puppet”, received US Senate confirmation by the smallest margin in the history of the Federal Reserve. The suggestion of political partisanship of the vote and Warsh’s reputation within the Fed may complicate Warsh’s attempts to engineer rate cuts.
- China’s President Xi and Trump have begun talks, but so far the summit is a nothing-burger (if one could afford burgers, with beef prices surging). Speculation about an imminent visit to China by Russia’s President Putin has perhaps been the most interesting development.