Daily update

  • Overnight US President Trump’s influential donor Musk reiterated a desire to “end the Fed.” Abolishing the Federal Reserve is part of the reported Project 2025 blueprint. This sort of talk, immediately ahead of significant trade taxes, is potentially disruptive. A central bank is probably necessary for reserve currency status.
  • Markets are assessing trade tax risks. This weekend Trump threatened “secondary tariffs” against Russia (taxing US consumers buying from countries that buy oil from Russia). This reiterated Trump’s willingness to tax US consumers in pursuit of diverse policy objectives. While trade with the US is important to many economies, it is not the most important part of economic activity for any economy.
  • The Dallas Fed manufacturing sentiment survey is of little use directly, but the comments section has some value. It matters if economic realities are penetrating partisan media bubbles. Last week’s Michigan consumer sentiment suggested this was not happening—the comments section of the Dallas survey offers some insight into partisan business thinking.
  • German February retail sales were stronger than expected, and January data was revised stronger (eleven of the last twelve releases were revised stronger). German and Italian March consumer price inflation is due, after benign French and Spanish data.
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