Insights and Market Perspectives

Welcome to the USMC trade agreement?

Author: Portfolio Specialist Group

September 17, 2018

A recap of last week’s top economic news and what’s to come

Trump continues to stoke global trade tensions

  • U.S. President Donald Trump instructed aides to proceed with tariffs on about $200 billion more in Chinese products despite his Treasury secretary’s attempt to restart talks with Beijing to resolve the trade war. But an announcement of the new round of tariffs was delayed as the administration considered revisions based on concerns raised in public comments.
  • President Trump also said he wants to rename NAFTA the “USMC” – for U.S., Mexico, Canada – and is threatening to cut out the Canadians and drop the “C” from the agreement’s name if Ottawa doesn’t offer significant concessions as talks remain stalemated over U.S. access to Canada’s dairy market and the future appeal process for companies hit by anti-dumping or countervailing duties.

Canadian housing starts dip, Canada identified among riskiest housing markets

  • Canadian housing starts dipped in August 2.3% to 201,000 units from 205,800 in July. Housing starts were expected to increase to 216,000 units. Homebuilding pulled back notably in Quebec, and Ontario with a large drop in Toronto, and drops in three of four Atlantic Provinces. Gains were recorded in Saskatchewan, Alberta and B.C.
  • Oxford Economics has identified Canada as one of the world’s top four riskiest housing markets along with Australia, Hong Kong and Sweden. With valuations extremely elevated, and high debt levels, the forecaster calls the situation ‘’especially acute,” posing a risk to economic activity.

Carney stays to navigate U.K. through Brexit transition

  • Mark Carney agreed to remain at the helm of the Bank of England for an additional seven months, extending his stay for a second time to help steer the U.K. economy through the Brexit transition.
  • Britain and the European Union are “closing in” on a withdrawal agreement, Brexit minister Dominic Raab said Friday, in advance of a meeting of European leaders in Salzburg this week.

Other economic news

  • Turkey‘s central bank has raised its key interest rate to 24%, up from 17.5%, in a dramatic bid to control rocketing inflation and prevent a currency crisis, ignoring calls for restraint from President Recep Tayyip Erdogan.
  • U.S. Congress has agreed to a budget bill that will avoid an Oct. 1 government shutdown and the White House has pledged to sign it. Several appropriations bills will win enactment this fall, but the remainder will be lumped into an omnibus bill that must be passed by Dec. 7 – the new “kick the can” deadline.

What’s to come

U.S. housing figures, CPI numbers released in both Canada and Japan

  • U.S. Housing starts will be released Wednesday while existing home sales will be released Thursday.
  • In Canada, a lot of attention is expected to focus on the release of August’s CPI data.
  • In Japan, August CPI numbers will also be released while the country’s monetary policy meeting is also on the week’s schedule.

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