Weekly Market Recap
Week in review
- 10/06 – CN – Trade data
- 14/06 – CN – Industrial Output
- 14/06 – U.S. – Industrial Production & Retail Sales
Thought of the week
If all currently proposed tariffs are implemented, the U.S. is set to surpass the average tariff rate of a number of emerging markets. Such a reversal in the stance of a major developed economy, which had historically championed free trade is detrimental to the current rules-based trading system. This change in attitude could lead to generally lower trade, supply chain disruptions, lower investments and rising inefficiencies, as comparative advantages are not fully exploited. We have already begun to observe some of these effects coming through. For example, EM Asia export growth has fallen from 10-15% year-over-year into negative territory over 2018. Growth in global capital goods imports have also slowed by 10 percentage points since the beginning of the trade disputes. Overall, we believe that the U.S. will likely reach a compromise with its counterparts in the current trade dispute, though continued skirmishes will pose challenges for the global economy.
Chart of the week