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After what was rather an eventful evening on the tariff front we can take a look East and see the impact on the land of the rising sun Nihon. Of course we start with the background of Japan being a net exporter and thus relatively vulnerable to any trade war. WASHINGTON — U.S. President Donald…
Finally we have arrived at Liberation Day when we will find out in full what US President Donald Trump plans on the tariff front. The Financial Times is presenting it in relatively apocalyptic terms. Investors are on edge ahead of Donald Trump’s plan to hit imports to the US with new tariffs “immediately” on Wednesday,…
Today the focus switches to the Euro area and of course it is bracing itself for the imposition of a wave of Trump Tariffs tomorrow. We are in a phase where being a net exporter is not working out as well as it once did. However this morning attempts to get ahead of the tariffs…
Today we switch focus to the Bank of England and one perspective is that it is caught between a rock and a hard place. The rock is the US Federal Reserve where in spite of the calls from President Trump for interest-rate cuts prospects have changed. On Friday we got the latest numbers for the…
One of the things I enjoy about economics is the way that releases can wrong-foot a trend.We have seen my home country the UK under pressure this week as Chancellor Rachel Reeves found herself having to re do her sums for the public finances. Her answers were not especially convincing as I looked at yesterday.…
Yesterday was a significant day for the UK economy and let us examine the words from UK Chancellor Rachel Reeves in her Spring Statement. We can start with what was rather a devastating confession. Mr Speaker… … earlier this month, the OECD downgraded this year’s growth forecast for every G7 economy, including the UK. And…
Today is rather a set piece event for the UK economy starting with the inflation numbers and then receiving the Spring Statement from Chancellor Rachel Reeves. The relief element in the title comes from this. The Consumer Prices Index (CPI) rose by 2.8% in the 12 months to February 2025, down from 3.0% in the…
Today the focus moves to Europe and the long list of challenges it faces. Let me start with what has been a long-running feature of the situation highlighted by the Purchasing Managers or PMI release yesterday. The seasonally adjusted HCOB Flash Eurozone Composite PMI Output Index, based on approximately 85% of usual survey responses and…
Firstly let me thank you all for the kind words on Friday. I had a spell of 48 hours where that is as ill as I have even been. Fortunately my GP responded promptly and something which takes a bit of stick for no longer working -penicillin- has done me a service. Hopefully I will…
Today sees the policy announcement from the Bank of England as it reveals how it voted last night. With even the Riksbank voting for unchanged I think we can expect that too. But last night the Federal Reserve gave the Bank of England rather a jolt. The emphasis is mine. The Committee will continue reducing…
Earlier this morning we heard from the Bank of Japan and customary Japanese politeness may have led some to think a change was on its way. At the Monetary Policy Meeting held today, the Policy Board of the Bank of Japan decided, by a unanimous vote, to set the following guideline for money market operations…
Today I wish to look at what may well turn out to be rather an epoch making moment for both the European Union and the Euro area. It starts with something rather awkward in terms of economics as we wonder what did they do with all the money here? “European countries collectively saved hundreds of…
This morning has brought a reminder of my central theme on the Chinese economy. For newer readers that is that we are seeing a balance sheet brake being applied to the economy via the bursting of the house price bubble. ALL CHINA FEB NEW HOME PRICES -4.9% Y/Y (JAN -5.0%) - REUTERS CALCULATIONS CHINA NBS:…
This morning has brought some disappointing news for the UK economy from the Office for National Statistics. Monthly real gross domestic product (GDP) is estimated to have fallen by 0.1% in January 2025, mainly caused by a fall in the production sector, after growth of 0.4% in December 2024. This is rather awkward for a…
Today the focus is back on the UK economy and much of it is being driven by an area very familiar to me. As someone who has spent years and indeed decades working in bond markets this rather caught my eye yesterday. The United Kingdom Debt Management Office ("DMO") announces that the auction of £4,000…
Today the economic focus is back on Europe in several respects. We can start with the consequences of the Trump Tariffs. We regret the unjustified US 25% tariff on steel and aluminium imports. The EU will protect its consumers and businesses. We are launching swift, proportionate countermeasures worth up to €26 billion, matching the economic…
The last fortnight or so has seen quite a turn in views on both the US economy and stock market. Starting with the economy we noted this on the 26th of February. So let us simply stick to a view that private-sector business surveys have picked up a clear slowing this month. So in the…
Last week saw a fundamental shift in the economic and military strategy of Germany and over the weekend we received an update. Good Morning from #Germany, where the CDU/CSU and SPD have agreed on an 11-page exploratory paper to form a govt following the €500bn debt package. While a few reforms have been introduced—such as…
This morning has brought bad news for the research student selected to present the morning meeting at the Bank of England. “The typical UK house price remained stable in February, with a slight monthly dip of -0.1%. Annual growth also held steady at +2.9%, with the average house price edging down by just £213 to…
Today the topic in economics and financial markets is the ECB and the Euro.That is because whilst its expected move is both somewhat mundane and according to a Reuters poll all 82 economists surveyed expected a 0.25% interest-rate reduction. The world has seen some ch-ch-changes this week to say the least and maybe something epoch…
Today we find ourselves waking up to news that was I am afraid pretty much inevitable. Chancellor Rachel Reeves will this week submit plans to Britain’s official forecaster for billions of pounds of spending cuts, with a focus on slashing the welfare bill to shore up the country’s weak public finances. ( Financial Times) As…
Today is hardly short of economic news. But under the radar we see one of our main economic themes rather strongly in play again. I keep pointing out that our political class are wedded to loose fiscal policy as we see a succession of stimuli. Global government borrowing is expected to reach a record $12.3tn…
This morning the economic news is arriving in the UK thick and fast. We can start with something relevant to the speech from Bank of England Deputy Governor Dave Ramsden who told us he was now more worried about inflation in spite of voting for three interest-rate cuts the latest of which was last month.…
This morning the UK is in the headlines and perhaps the crosshairs but we can start with hope for some good news to come. “I’ll tell you that he earned whatever the hell they pay him over there, but he tried,” Trump said of Starmer, describing him as a “very tough negotiator”. “We could very…
This morning has brought news which suggests that the claimed pivot from some ECB policymakers would be sensible. Annual growth rate of broad monetary aggregate M3 increased to 3.6% in January 2025 from 3.4% in December (revised from 3.5%). In fact 3.6% is the latest level overall. averaging 3.6% in the three months up to January.…
The start of the second Presidential term of Donald Trump has seen quite a few policy changes. But there is one area where things are looking rather familiar so let us take a look. Here is the Financial Times from earlier. The US House of Representatives has passed a budget blueprint that calls for trillions…
In a way today's news is a bit of a critique of the new claims of the European Central Bank I discussed only yesterday. Also it reminds me of my running theme looking at the efforts of the main Pacific economies to get a competitive advantage via currency devaluation. The Monetary Policy Board of the…
This morning the headline act is the news from Germany about its election. But underneath it there is an issue around monetary policy that may well be more significant and along the way will impact the new German government. Here is an interview from the Financial Times. The Eurozone risks “sleepwalking” into making too many…
This morning has brought another wave of UK official economic data. I am not quite sure how Retail Sales and the Public Finances make any sort of theme day. But we can start with some better news for economic prospects. Retail sales volumes (quantity bought) are estimated to have risen by 1.7% in January 2025.…
Sometimes good news can in fact be bad. Or perhaps it is more accurate to say it can expose past shortcomings. So let me start with what was some good news for Japan on Monday. From the Japanese owned Financial Times. Japan’s GDP expanded at an annualised rate of 2.8 per cent in the October…
Today is the day for inflation data in the UK and the numbers saw another rise. The Consumer Prices Index (CPI) rose by 3.0% in the 12 months to January 2025, up from 2.5% in the 12 months to December 2024. It always feels more significant when the big figure changes and keys in with…
Yesterday was quite an extraordinary day for the Bank of England and it came via the detail of the announcement. The headline was as expected but there was quite a nuance. At its meeting ending on 5 February 2025, the MPC voted by a majority of 7–2 to reduce Bank Rate by 0.25 percentage points,…
Today the Bank of England meets to vote on interest-rates and the decision is announced tomorrow. That seems to be news to some as I note this from David Smith in The Times today. On eight occasions each year, the Bank of England’s monetary policy committee (MPC) meets to vote on interest rates. Thursday is…
It is time for us to look East again to the land of the rising sun or Nihon. As so often we are getting a message from the Japanese Yen which has rallied to 152.60 versus the US Dollar. We can review this via the words of rather a rave from the grave in central…
The news from the Euro area over the weekend has made me reflect on the words of Dr.Isabel Schnabel of the ECB from just under a year ago. Back on the 19th of February last year I wrote about this. To assert its role, the euro area needs to remain competitive; it must be capable…
At the moment so many events are focused on Europe. At the present headlines are being created by the war in Ukraine and possible changes as to how that may play out. On its own it poses challenges as in the new situation both the Euro area and European Union are going to have to…
Last Thursday saw an extraordinary change of view from a Bank of England policymaker and via a speech at Leeds Becket we can look at her explanation. She got to it quite early in her speech and the emphasis is mine. Along the way, I will discuss the disaggregated data that underpin my assessment of…
Today's topic is something that has become a central theme of my work these days. Plus it links to yesterday's topic as we mull the way that central banks twist and turn on the issue of energy prices. But first let me get to the meat of the issue which is described below by the…
This morning has seen some better economic news for the UK as this was announced. Monthly real gross domestic product (GDP) is estimated to have grown by 0.4% in December 2024, largely because of growth in the service sector, following an unrevised growth of 0.1% in November 2024. As you can see we apparently put…