Daily update

  • US President-elect Trump has been posting on social media in support of a single budget bill through Congress. A single bill might take longer to pass, delaying policy implementation. Trump advocated taxing US consumers of foreign goods to pay for an abolition of taxes on tips. (Tipping has been a hidden inflation force in the US, raising the cost of services without being recorded in inflation data).
  • Media reports say Canadian Prime Minister Trudeau is set to resign as Liberal Party leader at a caucus on Wednesday. That might be relevant to markets. Trump’s talk of taxing US consumers of Canadian goods may be a bargaining tactic—but bargaining tactics work best if there is someone on the other side to bargain with.
  • Bank of Japan Governor Ueda has reiterated an intention to raise interest rates. Like most developed economy central banks, the BoJ is following inflation to maintain more or less stable real interest rates. Unlike most developed economy central banks, that means higher rates in Japan.
  • German preliminary December consumer price inflation data is expected to show a small increase. This is unlikely to concern policy-makers too much as underlying inflation pressures are generally subdued.
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