Daily update
Daily update
- As expected, French Prime Minister Barnier lost a vote of confidence. That was the shortest-lived French government in over sixty years (he did outlast the lifespan of une salade verte, however). The likely options for fiscal policy are either a compromise budget under the new government, or rolling the 2024 budget into 2025. Neither offers much fiscal consolidation, but investors know this already.
- Federal Reserve Chair Powell gave a wide ranging interview. He asserted the independence of the Fed (arguably the trend to global central bank independence is what brought about the great moderation of inflation). In extremis, it is worth remembering that the chair of the FOMC does not have to be the chair of the Fed.
- Powell signaled that the Fed would react to rather than pre-empt any consumer taxes imposed by US President-elect Trump via tariffs. That should allow US interest rates to continue to decline in the first half of next year.
- German October factory orders were stronger than expected, and past data was revised upwards (this year, factory orders have been revised higher 75% of the time). Factory orders have risen this year despite consistently (deeply) negative sentiment signals. US trade data is due later today —a modest focus given tariff threats.
