Daily update
Daily update
- The US June employment report was strong enough in the headline to dispel ideas of a sudden US interest rate cut. It was troubling enough in the detail to suggest a more negative outlook for the US economy. Job creation was very narrowly focused.
- US May trade data showed an effective tariff rate of 8.7%. This is about 60% of what the eventual effective tariff rate will be. A relatively large amount of goods imported (especially by ship) did not have to pay the April tariffs in May; June imports will have to pay. The staggered impact means April tariffs will inflate US consumer prices from July but the full damage is not likely before September.
- US President Trump suggested the next wave of trade taxes will be 10% to 70%. They said the tax revenue would come into the US on 1 August. The tax payments actually transfer from US company and consumer bank accounts to the US Treasury. Investors assume that if 70% taxes are announced, Trump will retreat.
- France, Spain, and Germany all provide data on their manufacturing sectors. Amidst all the noise, it is worth remembering that the rest of the world is trading with one another in a more or less civilized way, mitigating the economic damage.