Summary
Highlights
Confidence rose in May, but it is still below the levels seen at the beginning of the year.
Despite this short-term rapprochement between the US and China, tariffs on Chinese exports are still high.
- We think more clarity is needed on tariffs and US relations with trading partners. The recent US court ruling only raises uncertainty in this regard.
In this edition
US consumer confidence index rose sharply, and above expectations, in May to 98.0, mainly due to a temporary trade truce between the US and China on tariffs. Expectations about the near future also improved. However, the easing of trade tensions is temporary, and President Trump is still threatening other regions and countries with high tariffs. Obviously, any attempt to impose higher duties will affect consumers’ purchasing power and spending patterns that could undermine confidence later on. Given that consumption and labour markets are crucial for overall economic growth, any weakness here will impact the economy. Hence, more clarity is needed on US trade policies (beyond the 90-day truce period) to estimate the effect on consumption over the long term.
Key dates
3 June China manufacturing PMI, EZ inflation rate, US factory orders | 5 June ECB interest rate decision, China services PMI, US trade balance |
US non-farm payrolls and unemployment rate, EZ retail sales |
*Diversification does not guarantee a profit or protect against a loss.
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