The Dollar yesterday lost some of the gains made earlier in the week as risk aversion in the broader markets pushed US yields to a nine-day low. Concerns over a weakening housing market and the ongoing trade dispute between the US and China have caused treasury yields to drop, as the now-certain interest rate cut weighs heavy on the greenback.
Some are questioning the validity of the loosening of policy by the Federal Reserve, because it would be in the face of a record-breaking stock market and a powerful domestic consumer. Typically, the central bank would look for more signs of a slowing economy before affecting policy to ward off a recession. However, low inflation levels and weak global growth are worrying Fed officials, who now seem determined not to let these external factors affect the domestic economy.
The ongoing US-Chinese trade discussions seem to be exacerbating a slowdown in the world economy, and recent events suggest we may be nearing breaking point. China yesterday, 17 July urged the Trump administration to “make up its mind” about reaching a trade deal with Beijing, warning that additional tariffs could send negotiations further off track. The talks seem to have hit a stumbling block over Chinese telecoms company Huawei as Washington decides how to accommodate Beijing’s demands to ease restrictions.
In domestic news, politics dominates headlines yet again as a number of senior politicians have stated they are considering resigning from office as the Brexit negotiations rumble on. PM candidate Boris Johnson claimed yesterday that Theresa May’s “dead” Brexit deal “needs to be junked”, adding to fears the UK is heading towards a no-deal outcome. In the event the country was to depart the EU without a deal, The Times reported we would be heading for recession by 2020.
This morning, the UK will release its latest retail sales.
US inflation near historic lows
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