US-Iran on Nuclear Deal
A recent threat to impose Iran’s oil sanctions and repeated threats of military strikes if deals are gone have been troubling Iran’s economy, particularly oil exports. Trump threatened to “drive oil exports to zero” once again in order to stop terrorist activities and the nuclear programs. Yet, according to Bloomberg sources, Trump mentioned “getting close to an Iran nuclear deal,” hinting at a possible ending to US-Iran tension, which may also involve help from Qatar.
US Economic data
Softer inflation data are suggesting that businesses are absorbing additional costs from imports to maintain the demand for consumption, especially when the demand recently has been pulling back, as shown in the retail sales figures yesterday. Even the Chief US economist at Pantheon Macroeconomics, Samuel Tomb, stated that, “For now, distributors are not passing on all these extra costs to consumers.”
Furthermore, Federal Reserve Governor Michael Barr also warned of the risk of supply chain disruption related to tariffs imposed, as this could lead to slower growth and inflation risk. When it comes to small businesses that have limited access to loans, high inflation would disrupt their business operations and possibly lead to bankruptcy.
While JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon also did not rule out the possibility of having a recession yet, given the recent uncertainty. He mentioned that a step back from both the US and china on tariffs is a good thing and hoped to continue over the long run; however, high uncertainty would also lead to a decline in investment as well.
This has led the Federal Reserve to have two choices: either easing the monetary policies to support the economic growth or tightening to combat the inflation problem. Odds now stand for a rate cut in September, according to CME Fedwatch tool. While Trump continues to put pressure on for rate cuts anytime soon, he believes there is no inflation now.
