Better German growth

Daily update

Administration comments suggest US President Trump is willing to increase taxes on US consumers of EU-made products, if the EU does not make unilateral concessions on tariffs. Markets are unlikely to place too much weight on these threats given the president’s tendency to rapidly retreat on such issues, but the situation does (again) increase policy uncertainty.
The impact of trade taxes on the EU economy depends in part on the response of US companies. If US manufacturers react to tariffs by choosing to expand profit share rather than market share, then the effect on the EU is more muted (and mainly determined by the US slowdown). German final first-quarter growth was revised stronger, with some positive revisions to historical details. This is a characteristic of German data, which tends to underestimate activity on the initial release.
UK April retail sales volumes were stronger than expected—weather and the timing of Easter both playing a role. Nonetheless, the dire warnings of the retail sector following last year’s UK budget seem to have basis in reality.
The US Supreme Court carefully exempted the Fed from a ruling allowing US presidents (for now) to fire officials they do not like. This should calm (though not remove) market concerns about Fed independence.