Archives of “May 17, 2019” day

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IMF Lagarde: We expect world economic outlook will bounce back at the end of 2019

  
Analysis, Economy

For what it is worth…

Under the category, “For what it’s worth”, the IMFs Lagarde expects world economic outlook will bounce back at the end of 2019 and in 2020.  In addition, Lagarde says trade tensions between the US and China are a downside risk if not resolved.
For what it is worth, the second part will certainly impact the first part.

European stock indices and lower but well off low extremes

  
Analysis, Global Indices

European major stock indices end the session lower

The major European stock indices are ending the session lower but well off low extreme levels.
The provisional closes are showing:
  • German DAX, -0.5%
  • France’s CAC, -0.1%
  • Britain’s FTSE, -0.1%
  • Spain’s Ibex, -0.2%
  • Italy’s FTSE MIB, -0.22%
For the week, the indices are ending with gains:
  • German DAX, +1.4%
  • France’s CAC, +2.15%
  • Britain’s FTSE, +2.0%
  • Spain’s Ibex, +1.7%
  • Italy’s FTSE MIB, +1.0%
In the 10 year benchmark note sector, yields are ending lower, but off the low levels for the day. The German 10 year is still below 0.0% at -0.103%.
European major stock indices end the session lower

Nikkei 225 closes higher by 0.89% at 21,250.09

  
  Analysis

The Nikkei’s positive run today belies market sentiment in the region

Nikkei 17-05

Tokyo’s main index mainly jumped as Sony announced a share buyback and new partnership with Microsoft, resulting in a 10% surge in its shares – helping to lift the mood among Japanese investors. If you look over to China, the Shanghai Composite index is down by 2% now and that’s more indicative of the softer risk sentiment we’re seeing so far.

US equity futures are also down by about 0.4% so that’s continuing to put a drag on yen pairs, alongside weaker Treasury yields to start the day. USD/JPY holds at 109.64 currently, near session lows of 109.60 posted earlier.

China reportedly would rather suspend trade negotiations if US fails to show sincerity

  
  Analysis

CMP reports

US China

Citing a commentary published by Taoran Notes, a social media account affiliated with China’s state media:

“If there is no real concrete action by the United States, it will be meaningless for you (Mnuchin) to come and talk. It is better to suspend the consultation completely and return to the normal working track… The US does not show any sincerity in continuing talks… Instead, it is extending its pressure tactics. The US on one hand says it engages in talks, but on the other hand keeps using petty tricks to destroy the atmosphere for talks.”

Adding that China would not give an “effective response” to the US if Washington does not show sincerity in resolving the trade dispute between the two countries.
I would take note of the language used by China in responding, it basically shows how divided both parties are right now and that the atmosphere is growing more tense by the day. The commentary adds to the earlier report by Xinhua and is making for some uneasiness in markets as we begin the day.
The full report on the above can be found here.

China onshore weakens again today. USD/CNY above 6.9

  
Analysis, Forex

7 is thought to be a bit of a line in the sand. Not there quite yet but not far away at the pace CNY is losing ground:

7 is thought to be a bit of a line in the sand. Not there quite yet but not far away at the pace CNY is losing ground:
The PBOC has been allowing the yuan to fall. The view is the currency is not being ‘weaponised’ (i.e falling to make Chinese goods cheaper in the face of increasing tariffs).
To pop my tin hat on for a moment – that’s what China would love us to think though.
The argument supporting the PBOC not wanting it fall too far is that it will encourage capital outflow, which the PBOC is trying to keep under control.

Japan says they are staying out of the US-China trade war – won’t offer any solutions

  
  Analysis

Japan is Chair of G20 at the June summit.

They’ll be doing the gracious host thing and not offering unsolicited advice (indeed …. unsolicited advice givers are sooooo boring).
Vice Minister of Finance for International Affairs at Japan’s Ministry of Finance Masatsugu Asakawa:
  • Japan, as chair of G20, won’t intervene to seek solution to US-China trade frictions at finance leaders’ gathering in Fukuoka
  • Won’t include in G20 finance leaders’ communique language saying members will fight protectionism

Japan is Chair of G20 at the June summit.

Oil – This weekend the OPEC monitoring committee will meet

  
  Analysis

The Joint Ministerial Monitoring Committee (JMMC) meet Sunday in Saudi Arabia

  • will assess oil market conditions ahead of the full OPEC+ meeting in Vienna next month
You can expect discussion on:
  • US-Iran tensions
  • impacts on oil supply security in the Middle East
JMMC meeting will include OPEC and non-OPEC groups. Monday morning (Asia time) should bring some comments out of this.
Heads up.
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