The main economic data release from yesterday was the US balance of trade figures for October 2018. They showed that the trade deficit widened to $55.5 billion from an upwardly revised $54.6 billion the previous month and above market expectations of a $54.9 billion gap. It is the highest deficit since October 2018, thanks in large part to a drop in soybean sales and a surge in imports. Both factors have been hit by Trump’s trade war and that is likely to anger the self-proclaimed ‘tariff man’.
Despite the president’s best efforts, America’s trade gap has expanded for the last five months. It does bring into question Trump’s claim that trade wars are good and easy to win. It certainly wouldn’t be a surprise if the former reality television star did or said something regarding the trade relationship with China; the goods trade deficit with that country surged by 7.1% to a record $43.1 billion.
Wall Street tumbled, with the Dow Jones industrial average dropping by 466 points shortly after the opening bell rang. Fears of an economic slowdown and trade tensions with China were behind what proved to be a brutal trading session around the world. Composite and services PMI both came in above expectations at 54.7 in November. The markets had predicted a figure of 54.4. The ISM non-manufacturing PMI for November impressed, hitting a whopping 60.7 last month against an expectation of 59.2. Still, concerns persist over the impact of tariffs.
Initial jobless claims were slightly disappointing, as they decreased by 4,000 to 231,000 up to 1 December, when the markets had expected a steeper decline to 225,000. Still, employment is still strong in the US at present. Today we will see non-farm payrolls for November and the preliminary reading of the University of Michigan’s consumer sentiment. It is expected to dip a little to 97.0 from 97.5 the previous month.
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