Managing a “no deal” world

Daily update

Oil prices have edged higher on the lack of any discernible progress toward an Iran-US agreement. As with reports of an imminent deal last week, the reaction is muted. A jaded cynicism has come over investors, and in the absence of a definite statement from Iran there is a tendency to downplay comments from the US administration.
Japan’s first-quarter investment spending was weaker than expected, even when software spending (related to the shiny new toy of AI) was factored in. Uncertainty is being blamed. This is a global issue—the US factory building boom of the Biden era has quickly faded with uncertainty in several policy areas.
German April retail sales showed stronger-than-expected monthly growth, and (inevitably) there were very sizable upgrades to the previous month’s data. The data adjusts for inflation. Consumers in Europe (as in the US) are able to maintain non-oil spending. In Europe, some real income growth can be supplemented by lower savings. In the US, it is primarily lower savings.
There is another poll of US business sentiment today. The value is limited, but the prices paid component is likely to receive some attention. However, evidence suggests that costs are being passed down supply chains relatively quickly.