Daily update
Daily update
- US December consumer price inflation should show modest headline gains. It is worth distinguishing inflation pressures and relative price changes. Egg prices are likely to rise sharply—egg producer prices rose 127.9% y/y in December. This is a supply shock. Unless Federal Reserve Chair Powell becomes a chicken farmer, they can do nothing about this.
- US President-elect Trump wishes to establish an “External Revenue Service”. The use of the Oxford comma in the statement is an admission that US consumers pay Trump’s trade taxes (the service will collect “Tariffs [comma] Duties [comma] and all Revenue that comes from Foreign sources”). Tariffs seem to assume a different, more enduring role in this administration. This highlights the contradiction of single-issue politics. Duplicating the bureaucracy of the customs service would increase regulation.
- UK December inflation data was less than expected. The largest contribution comes from housing (partly a fantasy price). Producer prices were also lower than expected. This hints that the negative narrative around the UK might owe more to objections to government policy than economic reality.
- Spanish final December consumer price inflation is unlikely to change, and unlikely to impact markets. Yet more ECB speakers are scheduled.