Editor's note: This article has been updated following news of the pause in implementing tariffs. After a weekend that saw U.S. President Donald Trump impose steep tariffs on Canadian goods and Prime Minister Justin Trudeau put forward retaliatory measures, the widely feared tariff war appears on hold ... READ MORE >
Economics
Morning market minute: Tariffs and the rising dollar
Investor expectations of a new round of tariffs have caused the U.S. dollar to mildly appreciate in recent months. Now, with steep tariffs on goods from Canada, Mexico and China set to begin Tuesday, one should expect the greenback to go even higher against major trading currencies. Such a move will ... READ MORE >
How an escalating trade war will affect global growth, inflation and employment
The United States has announced steep tariffs on goods made in Canada, Mexico and China starting on Tuesday. Even though Canada and Mexico have promised retaliation, we anticipate that the disputes with those two nations will be resolved in the near term, though the standoff with China will last ... READ MORE >
Morning market minute: What guacamole tells us about the cost of tariffs
It’s well known that the average auto part crosses the border between the United States and Mexico several times. Same with Canada. So with 25% tariffs on all goods coming into the U.S. from Canada and Mexico set to begin on Tuesday, new cars are about to get a lot more expensive—anywhere from $3,000 ... READ MORE >
Trump, tariffs and financial markets
The Trump administration’s announcement on Friday that it would impose steep tariffs on goods from China, Canada and Mexico presents a fundamental contradiction in policy that financial markets cannot ignore forever. Tariffs cannot be both a negotiating tactic and an offset that raises revenues to ... READ MORE >
U.S. households show robust gains on spending and income
Further evidence of robust household income and spending growth was on display inside the December U.S. personal income, spending and PCE report released on Friday. In a separate report, the Employment Cost Index increased by 0.9% in the fourth quarter with overall compensation increasing by 3.8% and ... READ MORE >
Morning market minute: FHA loan demand shows rising stress among homebuyers
Over the past three years, demand for home loans from the Federal Housing Administration has roughly doubled--a reflection of tighter lending standards among banks amid rising mortgage rates, which currently sit above 7%, and intensifying affordability issues. First-time buyers are turning to ... READ MORE >
Robust household consumption supports 2.3% GDP growth
Gross domestic product in the United States advanced by a solid 2.3% in the final quarter of the year, driven primarily by a 4.2% increase in household consumption and a 2.5% rise in overall government spending. The top-line figure was dragged down by a 0.93% decline in inventories. For the year, GDP ... READ MORE >
Morning market minute: Managing currency risk in an era of regime change
We expect the international investment community to continue purchasing U.S. financial assets, and in particular to continue financing the U.S. budget and trade deficits. Not only are the yields on U.S. government bonds and securities higher than those in most developed economies, but there is the ... READ MORE >
Fed pauses rate cuts as inflation flattens out and policy changes loom
The Federal Reserve on Wednesday held its policy rate in a range between 4.25% and 4.5% and said it would remain on pause in the near term. The Fed’s decisions set up an inevitable clash with President Trump, who is on record as wanting lower rates in contrast with the hawkish pause adopted by the ... READ MORE >