From rate-cut bonanza to trade dominoes: What's going on in world economy

Here's a weekly wrap of what's going on in the world economy

More central banks are joining the rate-cut club as the world’s economic growth engines sputter. Global trade debacles loom large as finance leaders from the Group of 20 meet this weekend, even if they don’t want to talk about them.

Here’s our weekly wrap of what’s going on in the world economy.

Rate-Cut Bonanza

A whirlwind of Federal Reserve speakers this week — including dueling tones from St. Louis Fed chief James Bullard and San Francisco Fed President Mary Daly — culminated in the Fed’s Nos. 1 and 2 signaling that rate cuts aren’t yet deliverable, though trade tensions are pushing them there.

Where the Fed is hesitant, others are taking action, or preparing to do so. Australia took its benchmark rate to a record low after three years of pause, while India reduced its rate and paved the way for more easing. The European Central Bank pledged to stick with rock-bottom rates for longer, Russian Governor Elvira Nabiullina said it’s possible her central bank will cut rates next week, and in Switzerland the world’s lowest benchmark could slip further.

Trade Dominoes

The US-Mexico episode is shaping up in similar fashion to US-China tensions, with mixed messaging out of the White House, pressure from Trump’s own party in Congress and finger-pointing. At the same time, Trump’s also touting prospects for a post-Brexit U.K. deal and saying he’d probably spare ally Australia from tariffs. Regarding Mexico, it’s still rattling trade watchers that the US is using tariffs in a non-trade dispute, which kicks global policy uncertainty up a few notches.

Ahead of the G-20 leaders’ meetings later this month, all eyes are on finance officials — including US Treasury Secretary Steven Mnuchin and Chinese Finance Minister Liu Kun — as they gather in Fukuoka, Japan this weekend.

In the meantime, the US and China are each adding to their list of trade-war collateral targets. The US is freshly restricting Chinese students in US, and standing firm against Huawei even as others in Asia are reluctant to join in that fight. China’s taking greater aim at US companies, including FedEx and Ford, and wielding its powerful tourism tool to discourage travel to the US.

Factory Pain

Another month, another batch of disappointing PMIs. Asia’s raft of weaker manufacturing data was echoed in Europe, where Germany and the UK were especially sour. Even the US wasn’t immune, falling to its lowest since October 2016.