Daily update

  • US President Trump doubled taxes on US consumers of imported steel on Friday, and (so far) has not retreated from that tax increase. Trump reacted angrily when confronted with the Financial Times acronym “TACO”, and the implication that markets expect Trump to reverse policy rapidly. Investors may worry that Trump persists with these taxes, not because of some economic objective but instead as an emotional reaction to market perceptions of their negotiating stance.
  • Ukraine launched military strikes inside Russia, reportedly hitting Russia’s bombing capacity. Investors have not focused on the Russia-Ukraine war recently, but this counterattack raises two  relevant issues. In the short term, it presumably lessens ceasefire prospects as Russia is put at a disadvantage. Over the longer term, it raises questions about the nature of global defense spending as this was a relatively cheap drone attack.            
  • Poland’s presidential election has been won by the nationalist candidate, defying recent trends in international elections. This will create challenges for Polish Prime Minister Tusk, and investors will focus on Poland’s approach to the EU and NATO. The zloty has weakened on the news.                          
  • The data calendar is light. UK consumer credit data is a reliable indicator at a time when data quality is questionable. Federal Reserve Chair Powell is scheduled to speak.
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