A Trade War Armistice?
|U.S. Review
A Trade War Armistice? Don’t Make it a Holiday Yet
- Optimism soared this week on hopes of a forthcoming trade deal, as equity markets hit all-time highs and the yield curve steepened.
- Due to the lack of concrete details, we are sticking to our assumption that the 15% tariffs on $156 billion of consumer goods imports will go into effect on December 15, but recognize there is some upside potential to growth and rates if a deal is reached.
- Regardless, the economy has shown signs of stabilizing. The ISM non-manufacturing survey beat expectations this week by climbing to 54.7 from a three-year low of 52.6 last month.
Global Review
Central Banks Still Center Stage This Week
- Central banks were back in focus this week, starting with Australia. The Reserve Bank of Australia kept its official Cash Rate steady at 0.75% and reiterated that it was prepared to ease policy further if needed.
- Elsewhere, the Bank of England opted to keep its Bank Rate at 0.75%, but two BoE members unexpectedly voted to cut interest rates.
- Canada’s labor market added fewer jobs than expected in October; however, the unemployment rate remained at a near-record low. Even with the slight drop in October, the Canadian labor market is still performing relatively well.
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