Daily update
Daily update
- China’s long-awaited plan to boost domestic consumption is here (as yet without much detail). Unlike the 2024 stimulus, these proposals seem to directly address consumers’ fear of the future. However, the international spillover may be limited. Economic nationalism means that China’s consumers have been less inclined to buy foreign goods.
- The US government avoided a shutdown over the weekend that would have further damaged the US economy. US President Trump reiterated his intention to increase the tax burden on US consumers with widespread tariffs. Markets are not yet pricing in extreme proposals (weakness seems more about uncertainty caused by erratic policy).
- US February retail sales include inflation—egg prices will increase sales values. There have been suggestions that Democrats “front-loaded” more expensive purchases last year in anticipation of trade taxes (with the negative pay-back occurring now). However, the reality for most US households has changed little—spending depends on whether generally stable fundamentals triumph over declining sentiment.
- The dollar’s reserve status depends on a sense that money held in reserve in the US is “safe”. Topics like rule of law, liquidity, and the absence of capital controls create this sense of safety. Rule of law may come into focus, with weekend reports of the Trump administration ignoring court orders.
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A tale of two consumers
China’s long-awaited plan to boost domestic consumption is here (as yet without much detail). Unlike the 2024 stimulus, these proposals seem to directly address consumers’ fear of the future.
