Markets in countries at risk of US tariffs may have been pricing in risks for some time — equities in China, Mexico and Canada have all underperformed MSCI World since before the election. However, the performance of these countries’ equities last week suggests that investors are starting to become a little less worried. US president Donald Trump last week said he might impose a 10% tariff on China, starting in February — much less than the 60% Mr Trump threatened during his election campaign. At the same time the US president also said he was minded to impose a 25%

While US equity markets have rallied on expectations of fiscal stimulus and deregulation, early signs of consumer sentiment remain mixed, reflecting uncertainty about the potential impact of President-elect Trump’s economic agenda on household finances. The University of Michigan’s final November consumer sentiment index rose 1.3 points from a month earlier to 71.8, data showed Friday, its highest level since April. However, this marked a downward revision from the preliminary reading of 73, based on responses collected prior to the election. Core CPI, which excludes volatile food and energy prices, held steady at 3.3% in October. However, monthly price gains of

Donald Trump’s return to the White House, from next year, presents China with fresh challenges — especially in the wake of a persistent real estate crisis, weak internal demand and growing imbalances related to production overcapacity, as well as an ageing population and high levels of indebtedness, which will continue to weigh on China’s economic dynamism on a short- to medium-term horizon. Although the latest indicators showed some signs of stabilisation in activity (e.g., industrial production, retail sales), the downwards evolution of prices in China continues to reinforce the weakness of household consumption and the deflationary risks that limit the

For over a decade after the financial crisis central banks appeared to be the only game in town. While fiscal policy was focusing merely on consolidation, central bankers like masters of the universe were pushing monetary policy to its limits in an attempt to combat anaemic growth and low inflation: slashing interest rates to at or below zero, and spending trillions on quantitative easing asset purchases. The balance sheets of the central banks in the euro area, UK and US swelled sevenfold, from 20% of GDP to over 140%. Refresh this chart in your browser | Edit the chart in Datastream Things

As part of his re-election campaign, Donald Trump proposed a 60 per cent tariff on all Chinese goods. Whether he implements it or not, the US President-elect’s threat may be intended to bring Beijing to the negotiating table. But even if he succeeds in striking an agreement, it seems less clear that such a deal will lead to an increase in US exports to China. A study from the Peterson institute on the ‘Phase One’ deal between the US and China, agreed at the end of Trump’s last term, shows that China has bought none of the extra $200 billion

Jerome Powell’s speech at Jackson Hole was followed by a more aggressive than expected cut of 50 basis points. Everything seemed lined up for further cuts. Come October however, the nonfarm payrolls reported by the Bureau of Labor Statistics showed that US job numbers increased by the most in six months in September, pointing to a resilient economy. The majority of jobs were added in the education and healthcare, and leisure and hospitality sectors. Moreover, revisions to past data showed that the economy added 72,000 more jobs in July and August than previously estimated. This could mean fewer rate cuts

The recent 50 basis point cut to the fed funds rate has spurred on discussions regarding the health of the US economy. While many economic indicators have softened in recent months and some — such as the slope of the US yield curve, Sahm Rule or ISM manufacturing survey — point to a recession, there are valid reasons as to why this will, which is Fathom’s central view, be avoided. A yield curve inversion has often been touted as a sure-fire signal of a looming recession. Indeed, the yield on two-year treasuries exceeded the yield on ten-year treasuries ahead of

Last week the US Federal Reserve surprised economists by cutting interest rates by 50 basis points, instead of the widely expected 25. The Fed, with this move, has initiated its first rate-cutting cycle in four years, last observed when the central bank was forced to cut rates to zero amidst the onset of the COVID-19 pandemic. As detailed by Fed Chair, Jerome Powell, the reason behind this surprising move was a need to compensate for the Fed’s decision to keep rates on hold at their previous meeting, when weak labour market data was yet to be released and the indication

The Fed has cut the federal funds rate for the first time in four years. The bold 0.5 percentage point cut was more than consensus expected and brings the target range for the fed funds rate to 4.75– 5%. The Fed’s mandate is to ensure maximum employment and price stability. However, the FOMC said in a statement that recent indicators suggested that while economic activity has continued to expand at a solid pace, job gains have slowed and unemployment increased, justifying the stimulus measure. Inflation has meanwhile declined further towards its 2 per cent target. But the stickiest components of

Kamala Harris can point to strong economic growth, robust job creation and low unemployment during Joe Biden’s presidency. But Donald Trump polls well among voters on the economy, with some voters blaming Mr Biden (and by extension Ms Harris) for price rises during his time as president. When adjusted using headline CPI, official data show that there has been virtually no growth in wages since Joe Biden took office. Within that headline figure is a lot of nuance: for example, due to distortions caused by the pandemic (as some workers on lower incomes like bar staff and shop assistants could

The Bank of England joined the group of central banks that have cut interest rates this year when it trimmed Bank Rate from 5.25% to 5.0% on 1 August. The Federal Reserve, meanwhile, left the fed funds rate unchanged when it concluded its two-day meeting a day earlier. Jerome Powell did, however, indicate that a reduction may be on the cards soon. But when the Fed does start cutting rates, how gradually and how far will it go – and what are the implications for investors? Previous Fed rate-cutting episodes may not offer that many clues. The length of rate-cutting

It’s hard enough for the US Federal Open Market Committee to fulfil its task of returning inflation sustainably to its 2% target without any material increase in the unemployment rate, without having to wonder what the employment rate actually is. FOMC members are currently unsure whether employment increased by 272,000 or decreased by 408,000 in May – both are official figures from the Bureau of Labor Statistics. The establishment survey, which asks businesses about jobs, shows a pickup in hiring; while the household survey, which asks people whether they have a job or not, suggests fewer people in work. As