17th September 2018
There was a distinct lack of exuberance shown by equity markets this week to news that Steven Mnuchin, the US Treasury Secretary, had offered to restart talks with China in order to de-escalate the trade spat.
While this was disappointing, it was understandable given last week’s US employment data, coupled with the fact that it is Donald Trump and not Steve Mnuchin in the driving seat – and of course, he could easily decide to impose further tariffs on China in advance of any talks (and use their removal as a carrot).
As expected the BoE left interest rates unchanged this week, while the accompanying minutes had a slightly dovish tone due to comments on Brexit uncertainty. Consequently, I was therefore gobsmacked to read that the BoE Governor, Mark Carney, told cabinet ministers yesterday (Thursday 13 September 2018) that a no-deal Brexit would probably see UK interest rates rise!
In Europe, the ECB also left interest rates unchanged and reiterated its commitment to keeping rates unchanged “at least through the summer of 2019”. The ECB also lowered its growth forecasts for this year and next (to 2% and 1.8% from 2.1% and 1.9% respectively). CPI inflation forecasts stayed the same at 1.7% for 2018, 2019 and 2020.
This coming week we have UK CPI and UK retail sales data; eurozone CPI and PMI; and US housing data (housing starts; building permits and home sales).
Ian Copelin, Investment Management Expert*
*Ian Copelin is an Investment Director at Wealth at Work Limited which is a member of the Wealth at Work group of companies