The US Fed has made the third consecutive cut to its benchmark rate to 1.5 to 1.75%, but signalled that it does not expect a further cut in December. Chairman Jay Powell said that a preliminary US-China trade deal and lower risk of a no-deal Brexit had the potential to increase business confidence. So it’s a pause for now. How long will it last?
Uncertainty is the word that has perhaps come up even more often than Brexit in recent times. We talk about it a lot and even about how it is increasing. But how do we measure it and how do we know if things are more or less uncertain now than in the past?
US/China trade tensions are intensifying. The Chinese authorities announced $75bn 5-10% tariffs on US imports, targeting cars, oil and soya. US President Trump retaliated, unveiling further tariff rises though his stance at the latest G7 meeting was conciliatory. Meanwhile, Federal Reserve Chair Jay Powell hinted at another rate cut soon.
Global trade tensions are ratcheting up. Whilst the US and China trade blows President Trump warned of a 5% increase in tariffs on Mexican imports, rising 5% a month up to a maximum 25% in October. Meanwhile China’s manufacturing PMI came in a little soft. But tariffs can only partly be blamed there.
US/Sino trade tensions are rising. US President Trump’s announcement of new tariffs on Chinese imports has prompted threats of retaliation by China, posing downside risks to the global economy as supply chains are disrupt and business sentiment suffers. Meanwhile, UK Q1 GDP data highlights the resilience of the UK economy.
UK growth has picked up a bit of speed in Q3, judging from latest monthly GDP figures, with strength widespread. However, recent favourable weather flattered the headline rate, so a moderation in growth looks likely in Q4.
Not only has the poor weather prolonged winter and darkened our moods, it also looks to have taken a fair slice off economic growth in the first quarter. With luck it’s just a blip.
So, the UK has voted to leave the EU. But what does that actually mean? For now, it means no change, as David Cameron signalled today that his successor decides whether to trigger Article 50 of the Lisbon Treaty. Only when this happens does the clock start to tick on two years of negotiation for the UK’s exit from the EU. In the meantime, we have seen heavy falls in UK equities, sterling has slumped, and we can anticipate further short-term volatility. But what are the key questions emerging from the Referendum results from a NI perspective? Continue reading
