The question is, can the small private businesses which keep the US ticking over survive? Many are already under extreme amounts of pressure as consumption returns very slowly. The prospect of another month without support could be the final straw for many. We can expect to see the economic recovery in the US slow on the back of Trump’s decision, unemployment could even start to tick higher again.
Heading into the European session, the reaction to Trump’s cancelling of fiscal stimulus talks is less acute. On the one hand the safe haven greenback is pushing higher and oil prices are pushing lower, however, on the other European markets are showing some defiant resilience. The sell off in Europe is lighter after Wall Street closed off session lows as Trump attempted to back track slightly.
German industrial production misses
The European economic calendar is relatively light. German Industrial production missed forecast -0.2% MoM in August vs +1.2% jump in July. The impressive run of data from the Eurozone’s largest economy has hit a speed bump reminding investors that this will be a shaky ride to recovery.
UK house price data will be in focus later this morning, potentially providing another bump higher for house builders. Looking ahead FOMC minutes will be the key focus in the US session.