Rate hikes and tariffs worry Merkel in Berlin, Xi in Beijing

Donald Trump’s decision to raise tariffs on steel and aluminum, or to put an end to China’s “economic aggression,” could set fire to global finance.

From Chancellor Angela Merkel who castigates “a very bad idea” to her counterpart Xi Jinping who promises a “firm response”, Germany and China, which are the two countries with the most surplus trade balances, are deeply concerned.

According to Cyceon, if the reaction is so strong, it is because not only is Trump taken seriously, but above all does he really have the means to cut the gigantic commercial profits that Berlin and Beijing have been gorging on for at least fifteen years.

On the financial side, it is as always instability and uncertainty that drive the downturn, much more than the decision of Trump whose best traders will seize profitable opportunities because there will be, says a trader at the CBOT in Chicago.

On March 22, 2018, the US Federal Reserve (Fed) raised its fed fund interest rate by 0.25 percentage points from 1.50 percent to 1.75 percent, meaning the sixth increase since December 2015.

“The economic outlook has strengthened in recent months,” wrote the Fed in a FOMC statement. “So do not give in to psychosis, it would be beneficial if a pullback takes place and helps everyone to get off to a good start,” said a New York-based trader reached by Cyceon.

Indeed and despite the context, the indexes remain at record levels and would still be even in the case of a sharp 10 percent correction.

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