Live, rolling coverage of business, economics and financial markets as US president said he would impose first tariffs of new administration on 1 February
Good morning, and welcome to our live coverage of business, economics and financial markets.
Canada and Mexico are bracing for the impact of 25% US tariffs after Donald Trump said they would be imposed on Saturday.
We’ll be announcing the tariffs on Canada and Mexico for a number of reasons. Number one is the people that have poured into our country so horribly and so much. Number two are the drugs, fentanyl and everything else that have come into the country. Number three are the massive subsidies that we’re giving to Canada and to Mexico in the form of deficits.
Our data show that investors are getting used to Trump’s policy shifts and rhetoric. Fear of a meaningful change in immigration policy, tariffs and spending has not been borne out.
Our mood index, which captures equity buying against bill selling, remains extremely positive but with peaks this week, suggesting significant downside risks for the month ahead.
It is possible that Trump goes ahead with the 25% announcement for Mexico and Canada, which would be market negative. However, we still view tariffs as a negotiating tool and even if Trump does go ahead with the tariffs, it will be followed by a period of intense negotiations and eventually a portion of tariffs will be pulled back. But come Monday morning, there is a possibility of market volatility around tariff news.
The housing market continues to show resilience despite ongoing affordability pressures.
While there has been a modest improvement over the last year, affordability remains stretched by historic standards. A prospective buyer earning the average UK income and buying a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 36% of their take-home pay – well above the long-run average of 30%.
8:55am GMT: Germany unemployment rate (January; previous: 6.1%; consensus: 6.2%)
9am GMT: European Central Bank survey of forecasters
1pm GMT: Germany inflation rate (January; prev.: 2.6%; cons.: 2.6%)
1:30pm GMT: US core personal consumption expenditure inflation rate (December; prev.: 0.1%; cons.: 0.2%)