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US Back to the Bargaining Table? | BOC Back to Fundamentals

Published July 12, 2018
  • After suggesting that other Western nations double their arms budgets to 4% of gross domestic product, Donald Trump had to allay concerns about America’s commitment to the generations-old defense pact; he had wanted to walk away unless partners “immediately” increased spending. The US president caused ripples with a heated attack on Germany, saying its purchases of Russian gas meant “Germany is totally controlled by Russia.”
  • US consumer price numbers are due out at 8:30 EST. The report for June is forecast to show an index gain of 0.2% for the month and 2.9% from a year earlier, following a big jump in May. It comes at a critical time for markets as the Federal Reserve continues its tightening cycle.
  • Beijing and Washington sought to defuse an escalating trade war after the Trump Administration released the biggest list yet of Chinese goods it may hit with tariff increases. China’s Vice Minister of Commerce Wang Shouwen stated “when we have a trade problem, we should talk about it.” The move back to the bargaining table matches some willingness from the Trump Administration to resume talks.
  • The Bank of Canada continues to evoke confidence as the economy is “operating at capacity with inflation already at target”. “Those are your basic ingredients which suggest that interest rates cannot continue to be excessively stimulative,” Poloz said after Wednesday’s decision to lift rates to 1.50%. The odds of a rate hike in October jumped to about 65%, up from 50%.