Daily update

  • US President Trump’s administration clarified the 125% tax on imports from China was 145%. This increase will not shift demand patterns (it will cost US consumers more money). For investors, this raises policy competence questions again. A well-planned trade tax would consider costs. Tax rates set seemingly at random question whether costs are properly considered.
  • US Treasury Secretary Bessent said that they saw nothing unusual in yesterday’s market moves. The 30-year Treasury yield experienced the biggest increase since 1982, equities are falling, the dollar is falling, and gold hit an all-time high. Economists might consider this pattern not entirely usual.
  • The US House of Representatives passed a substantial deficit-financed tax cut (Senate  reconciliation follows). Bond market vigilantes might not be in the mood for substantial deficit-financed tax cuts. A Supreme Court decision may mean the president could fire members of the Federal Reserve in the future. Bond market vigilantes might not be in the mood for a politically-run central bank.
  • UK production data was better than expected, reflecting the before times. US March producer price data might show some price increases in anticipation of tariffs. Michigan consumer sentiment data includes Republican sentiment. This has risen consistently since November. A decline might suggest economic pain penetrating the media bubble. 
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