UK: US VP Vance Talks Up Possible Trade Deal
In an interview with UnHerd, US Vice President JD Vance talks up the prospect of a trade deal being struck with the UK. Vance says, “We’re certainly working very hard with Keir Starmer’s government” [on a trade deal], adding, “I think there’s a good chance that, yes, we’ll come to a great agreement that’s in the best interest of both countries”. Vance also talks up the US' "cultural affinity" with the UK and President Donald Trump's admiration for the British royal family.
- UK Minister of State for Industry Sarah Jones said earlier to the BBC she agrees with Vance that the UK is "in a good position", but does not want to provide a "timeline" for an agreement, saying that "conversations are still taking place".
- A major stumbling block to any deal will be rules regarding animal welfare, food safety, and environmental standards. Secretary of State for Business and Trade Jonathan Reynolds said on 13 April, "We will never change our SPS (sanitary and phytosanitary) food standards. We've made that perfectly clear to the United States". A White House statement from earlier in April said that “The UK maintains non-science-based standards that severely restrict US exports of safe, high-quality beef and poultry products.”
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FED: March Economic Projections: Higher Inflation, Weaker Growth, Same Rates
The MNI Markets Team’s expectations for the updated Economic Projections in the March SEP are below.
- The unemployment rate is likely to rise slightly for 2025 alongside a downgrade in GDP growth, while the 2025 core and headline PCE inflation projections are set to rise again. Changes to later years will likely be limited, however.
- More detail on the shift in Fed funds rate medians is in our meeting preview - we will add more color next week.
FED: Market Pricing Nearly 3 2025 Cuts As Conditions Tighten
Amid rising government policy uncertainty, sentiment among businesses and consumers has fallen sharply since the start of the year, while equities and the dollar have reversed their post-election rise. Overall, financial conditions have tightened, even if stress is not yet mounting, e.g. no major widening of credit spreads (the accompanying chart shows the Fed’s financial conditions impulse index but only through January).
- Combined with growth fears, this has affected expectations for the Fed’s rate path, with around 18bp more cuts expected in 2025 compared with what was seen after the January FOMC. 65bp of cuts are priced for the year as a whole. 2025 cut pricing reached 71bp before the February inflation data and 76bp before the February payrolls report.
- A rate cut is seen with near zero probability for March’s meeting, but the first full cut is just about priced for June, with a second nearly priced by September.
- Chair Powell has no reason to endorse or refute these expectations – he’s likely to be happy with a press conference that ends with little discernable change in pricing.
CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
- CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
