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THE DAILY MACRO BRIEF: Europe responds, Trump criticizes the Fed, Swiss rates, Sovereign rating...

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04/15/2019 | 08:57am EDT

Donald Trump (again) puts pressure on the Fed, whose independence is disputed. In terms of trade negotiations, Europe does not intend to be complacent and goes on the offensive. The Swiss National Bank's rates could be even more negative. Germany retains its triple AAA. Poland does not want the euro.

Donald Trump is going after the Fed for the nth time. The President reiterated his criticism of the Federal Reserve, accusing it of slowing economic growth and stock markets. Donald Trump is trying to guide the Fed's choices by putting more and more pressure on it and by trying to form the Governing Council team as he sees fit. In this respect, Mario Draghi said he was concerned about the independence of central banks in other countries, especially in the US.

Europe is fighting back. After Washington has released a list of European products likely to be overtaxed to the tune of 11 billion dollars, Europe is preparing a list of 20 billion euros of American products to be overtaxed.

Rates may be even more negative in Switzerland. Thomas J. Jordan, the President of the SNB, told the IMF and World Bank meeting (April 8-14 in Washington) that the National Bank expects lower than expected inflation and that there is no risk of overheating the economy. For the time being, it has no intention of changing its monetary policy, which has been very accommodating for years, with its main key policy rate at -0.75%. However, the central banker says that the SNB still has room to lower its rates if necessary. 

Good score for Europe's leading economy. Standard and Poor's confirms Germany's AAA rating and stable outlook. S&P believes that domestic demand, supported by a robust labor market and an expansionary fiscal policy, would boost the country's economic growth.

Poland will not be adopting the euro any time soon. The Polish Prime Minister said on Saturday at a conference that the government intended, for the time being, to keep its own currency (the zloty). He believes that the single currency is "for strong countries" and that he does not want "early adoption".

Slight decline in confidence in Michigan. The University of Michigan's consumer confidence index fell more than expected in April, from 98.4 the previous month to 96.9, while analysts were expecting 98.1. Nevertheless, the institute reveals that this decline is insignificant because the index remains at high levels (see graph) and that the impact of the tax reform has practically disappeared.

Romain Fournier
© MarketScreener.com 2019
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