Uncertainty continues

Daily update

The weekend has demonstrated that US policy uncertainty is likely to continue. On immigration and Iran there were contradictory signals, and the confusion about the White House press secretary demonstrates a general assumption of few conventional boundaries to the administration’s decisions. This uncertainty matters to expectations about the oil price, and also to firms attempting to take strategic longer term decisions.
Data is also adding uncertainty. Last Friday’s US employment report was strong, but the actions of voters suggest a considerable unhappiness with the state of the economy. It may be that problems are just more visible in the social media age. The affordability crisis is still in evidence—average earnings imply that wages are growing more slowly than inflation, and certainly grow more slowly than inflation perceptions (which are what matter to affordability).
Chinese consumers are also not happy, but in their case turn that unhappiness into lethargic demand. This was partly reflected in the October inflation data, with consumer prices growing less than anticipated.
The big data releases come later this week. German trade data showed stronger export growth. Bank of England governor Bailey is set to speak, and the hope is we will get more insight than the metaphorical shoulder shrug that accompanied the last rate decision.