The dangers of being single

Daily update

Affordability remains in focus. US President Trump pledged yesterday to prevent institutional investors buying single family homes, explicitly because of affordability. This follows a series of reversals on highly visible tariffs. These are single issue policies—aimed at tackling narrow problems, rather than being a part of a broader platform.
Single issue politics carries market risks. It is less predictable, and more prone to be driven by social media and sentiment. It may be contradictory. Trump also urged a 50% increase in US defense spending, to be paid “by tariffs”. Current tariff revenue is less than the administration hoped, is likely to decline, and does not cover all the proposed spending. If this mooted fiscal largesse and ongoing foreign adventures worry bond investors, rising bond yields could push up mortgage rates—undermining policy efforts on housing affordability.
German November factory orders were significantly stronger, partly because of a small number of large orders (which are hard to forecast). The data is a reminder that the European economy has been operating around its trend growth rate.
US October import and export data is still distorted by US companies’ attempts to stockpile and avoid tariffs. Initial jobless claims and other labor data is likely to be of more interest to markets.