United fronts

01 Apr 2025 2 min read

Daily update

  • A social media post from a semi-official China account suggested that China, Japan, and South Korea would present a united front against US trade taxes. Korean officials suggested this might be exaggerated, but the fact that this is remotely plausible reflects the reconfiguration of how the world works (or does not work). China and Japan are the two largest central bank holders of US dollar assets.
  • The Dallas Fed manufacturing sentiment survey comments section was full of concerns about tariffs. There may be selection bias (surveys are generally completed by people who want to complain), but the level of concern was striking. Much of the focus was on the uncertainty of erratic policy making rather than tariff levels as such.
  • French far-right leader Le Pen’s conviction for embezzlement and ban on running for office is in line with other convicted politicians (former President Sarkozy, for instance). At a time when the French government does not have a majority in the national assembly, it might increase uncertainty. Markets had limited expectations around fiscal policy, however.
  • The UK March BRC shop price index remains in deflation. Food prices were unchanged on the month, while non-food prices kept falling. It is not market forces, but managed prices that are behind UK inflation.
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