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Good morning. Higher U.S. tariffs on Chinese goods have gone into effect, Uber is set to start life as a public company, Brexit remains mired in uncertainty and the Federal Reserve will get its first big inflation test. Here’s what’s moving markets. 

Tariff Time

The U.S. slapped 25% tariffs on around $200 billion worth of Chinese goods today, following through on the promise President Donald Trump made via Twitter at the start of the week. Financial markets will be concerned with little else today. Investors will now be hoping that the “beautiful letter” Trump received from Chinese President Xi Jinping will help get a deal done as talks continue in Washington. Global stocks have lost more than $2 trillion in value in the lead up to the higher tariffs being imposed and China’s currency has blown through all sorts of key levels on its way lower, though it recovered some ground on Friday. China has said it will retaliate and it has some powerful weapons at its disposal.

Uber Pricing

If there is one event today that may compete for attention in markets with the trade concerns, it’s the pricing of shares in the year’s biggest IPO. Ride-sharing giant Uber Technologies Inc. raised $8.1 billion and priced its offering at the bottom end of the range. It’s also aiming to be selective about who gets the shares, seeking more long-term investors in order to avoid the volatility that has plagued smaller rival Lyft Inc. since it went public. Given how stock markets look right now, Uber’s timing may not have been ideal but there will be some big winners nonetheless.

Still No Deal

There is still no sign of any agreement forthcoming between the Conservatives and Labour on the U.K.’s departure from the European Union. Labour leader Jeremy Corbyn says the government has to move its red lines, while the government says there is lots of work still to be done. Contenders to succeed Theresa May as prime minister are lining up, even after she got a reprieve earlier in the week. Labour wants to talk about anything other than Brexit. The Liberal Democrats, fresh from a strong showing in local elections, invoked the Sex Pistols as they continued to call for a second referendum. All in all, uncertainty abounds.

Transitory Test

Putting aside all the considerations Jerome Powell and his Federal Reserve colleagues have to contend with around trade, Friday will provide the first test of whether low inflation is indeed “transitory.” Core consumer price inflation, with a particular eye on clothing and shelter measures, comes after producer price inflation in April rose less than anticipated. This after Fed Governor Lael Brainard said the central bank should look at targeting Treasury yields as part of its review of monetary policy, though the sheer size of the market may make that a tall order. Note too that the yield curve inverted briefly on Thursday for the first time since March.

Coming up...

The lack of progress in the U.S.-China trade talks put a lid on global stock markets, leaving them staring down the barrel of their worst week since December. Oil is holding relatively steady and metals markets are higher. After another week of toil in the Brexit negotiations, U.K. GDP figures later are likely to be closely watched. And a trio of European Central Bank speakers may also attract some attention as markets continue to look for pointers on future policy.

What We’ve Been Reading

This is what’s caught our eye over the past 24 hours.

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