Reescalation of Trade Tensions Trump the July Employment Report
Although the release of the July employment report is big news, the dominant news continues to be trade.
After the Fed cut rates by 25 basis points on Wednesday, President Trump made it clear he wasn’t pleased, tweeting that Chairman Powell had “Let us down.” During Wednesday’s post-meeting Fed press conference it became apparent that trade has been, and will continue to be a factor in the FOMC’s decision-making process. Chairman Powell told reporters that trade tensions, “appear to have returned to a simmer” and actually mentioned the possibility of hiking rates in the future…presumably when trade uncertainty dissipates. Yesterday, President Trump turned up the heat on the “simmering tensions” with the unexpected announcement of a 10% tariff on another $300 billion in Chinese goods beginning in September. This move has been described by economists as a “bombshell,” a “game-changer” and “a major escalation.”