Symbolism

Daily update

US President Trump left the G7 summit a day early. Their departure does not change much of substance—the US was resisting a joint statement on Iran-Israel. However, there is symbolism about Trump’s willingness to cooperate with others. An executive order to implement some of the UK trade agreement was signed, but little progress seems to have been made with Japan.
The Iran-Israel fighting intensified, but is within market expectations. Israel appears to be targeting Iranian missiles, and Iran is firing missiles while it still has them. Markets seem unlikely to change their risk assessments, though neither the higher oil price nor geopolitical risk have produced much of a safe-haven bid for the dollar.
US May import price data signals where the burden of trade taxes is falling. These are pre-tax prices. Some imports’ prices naturally decline, so if price declines are more than usual that suggests foreigners are squeezing profits. If existing price trends are maintained, the burden is borne by US consumers.
US May retail sales will not reflect trade tax effects; aside from a small number of products (like bananas) pre-tax inventory is being sold. Meanwhile the Bank of Japan, as expected, slowed the pace of quantitative policy tightening in response to higher government bond yields.