The Supremes

Daily update

The US Supreme Court hearing on the legality of the majority of the US administration’s tariffs produced a positive reaction from tariff-related equities. The questioning from some justices, including the chief justice, seemingly increased investor expectations that the tariffs would be declared illegal. That should entail a rebate to US companies, which would offer a fiscal boost to the US economy.
The assumption is that if these tariffs are overruled, new tariffs will take their place using different justifications. However, while the same effective tariff rate may be achieved some individual tariffs would probably increase, and others fall. When tariffs were reduced recently, consumer prices did not necessarily fall—which might mean that restructured tariffs give a further (modest) boost to US inflation in time.
The Bank of England is widely expected to leave rates unchanged. While a wide spectrum of views on policy exist within the bank, the imminent government budget announcement makes changing monetary policy at this meeting unwise.
Eurozone September retail sales data is due. This is not a market moving event, but it is a reminder that the European consumer has been spending money. Retail sales have tended to outperform expectations—perhaps signaling the Eurozone consumer narrative is too pessimistic.