The US Dollar is backing off from a two-year high.
Archives of “May 25, 2019” day
rssChina’s top banking regulator says yuan bears will suffer ‘heavy losses’
China’s banking and insurance regulator said on Saturday it did not expect a persistent decline in the yuan and warned speculative short sellers they would suffer “heavy losses” if they bet against the currency.
The yuan has lost more than 2.5% against the dollar since the festering China-U.S. trade dispute intensified earlier this month. It is now less than a tenth of a yuan away from the 7-per-dollar level authorities have in the past indicated as a floor.
“Short-term fluctuation of the yuan exchange rate is normal, but in the long-run, China’s economic fundamentals determine that the yuan will not depreciate persistently,” Xiao Yuanqi, the spokesman for the China Banking and Insurance Regulatory Commission (CBIRC), told a finance forum in Beijing.
“Those who speculate and short the yuan will for sure suffer heavy loss.” (more…)
We are back $100,000 target.
How UK Tories will Pick May’s Successor
There is a two-step process to pick the next head of the Tory Party. The leader will be the Prime Minister and head a minority government. May’s minority government was supported by the Democrat Unionist Party from Northern Ireland. It is not clear that if a hard Brexiter succeeds May, the DUP will support it. This could trigger snap elections.The process begins with the Conservative members of parliament submitting formal recommendations.Assuming more than two are nominated a run-off contest among the Tory MPs takes place on Tuesdays and Thursdays removing the smallest vote getter each time until two candidates remain. At the point, the wider party chooses. The process could take several weeks.
While May arguably played a weak hand poorly, the divide within the Tory Party is severe and may be irreparable even with a stronger leader. The new European Commission may be in place as the October 31 deadline approaches. One of the remarkable developments since the UK referendum nearly three years ago is how united the EU has been and how divided the UK, which is the opposite of what conventional wisdom in 2016 expected.
Sterling remains little changed on the day. May’s resignation was leaked reported late yesterday, and follows heightened speculation after the quick rejection of her inducements to get the Withdrawal Bill approved. She was urged to resign before the EU Parliament election and instead announced her intentions before the results were known. The risk that May is replaced by a person who willing to leave in a more disruptive fashion than May has undermined sterling, which is pinned near the year’s lows.
Global Times editor: Believes there will ultimately be a deal…but losses aren’t big enough
Global Times editior Hu XiJin tweets.
The Global Times editor, Hu Xijin is tweeting:
The tweets of the Global Times editor has been followed of late.
Intelligence suggests a campaign by Iran that ties together threats across region
Pentagon on Iran
- Pentagon says none of the additional forces headed to Iraq or Syria, meant for defense purposes amid a Iran threat
- US military says believes Iran’s Revolutionary guards directly responsible for attacks on tankers off United Arab emirates
- Pentagon says of 1500 additional troops, only about 900 will be newly deploying, 600 already in region will be extended
- Pentagon says 1500 forces include Patriot missile battery personnel, manning for surveillance aircraft, and engineers
- US military says intelligence suggests a campaign of Iran that ties together threats across region
Iran tension remains a geopolitical risk.
Meanwhile:
- Russian lawmaker says Russia could raise questions of US troop deployment to Middle East and UN Security Council
What’s on the US economic calendar next week
What to watch for
Monday:
- US markets closed for Memorial Day, no data
Tuesday:
- Case-Shiller 20-city house price index
- Conference Board consumer confidence
Wednesday:
- Richmond Fed
Thursday:
- Second reading on Q1 GDP
- Advance goods trade balance
- Pending home sales
- Fed’s Clarida at Economic Club of New York
Friday:
- PCE report
- Chicago PMI
- U Mich final consumer sentiment
- Fed’s Bostic and Williams
- Friday is the final day of May
The market is suddenly sensitive to economic data and fears that the US economy is decelerating with more in the pipeline because of the trade war. Misses to the downside will be punished.
Wall Street ends week lower despite Friday bounce
US markets bounced back on Friday as global markets stabilised following supportive comments on trade from Donald Trump. However the modest gains were not enough to prevent the major indices from ending the week in the red amid worsening US-Chinese trade tensions and mounting global growth concerns.
S&P 500 edged out a 0.1 per cent gain in New York on Friday, following falls in the previous session to finish the week down 1.2 per cent. This marks the benchmark’s third straight week of decline and its longest weekly losing streak since December.
The weekly drop comes even after US President Donald Trump on Thursday said there remained a “good possibility” that the negotiations with Beijing could get back on track. He added Huawei, the Chinese telecommunications network company, could still be “included” in a trade deal with Beijing.
The Dow Jones Industrial Average ended the week down 0.7 per cent despite Friday’s 0.4 per cent bounce. That makes it its fifth back-to-back week of losses, the most in eight years.
The Nasdaq Composite closed up 0.1 per cent for the day and down 2.3 per cent for the week.
The yield on US 10-year Treasury bonds was up 2.8 basis points at 2.3237 per cent, after dropping to its lowest level since 2017 in the previous session as investors sought the relative safety of sovereign debt.
The Europe-wide Stoxx 600 closed up 0.6 per cent, with the trade-sensitive technology sector rising 0.4 per cent.
UK markets pushed higher after Theresa May announced she would stand down as prime minister in two weeks’ time, while global stocks were stable following supportive words overnight on trade from Donald Trump.
Sterling traded higher than $1.27 as Mrs May outlined her June 7 departure plans from Downing Street on live television. The currency, close to its lows for the year, has fallen more than 2.5 per cent this month as Mrs May’s efforts to break the Brexit impasse have fizzled out. The yield on the benchmark 10-year gilt was recently up 2 basis point to 0.971 per cent, while London’s FTSE 100 ended the session up 0.7 per cent.
Chinese equities outperformed others in the region, with the CSI 300 rising 0.3 per cent, having given up earlier stronger gains. The benchmark index of Shanghai and Shenzhen-listed stocks has fallen 8 per cent this month, on track for its steepest monthly drop in more than three years.
Hong Kong’s Hang Seng index was up 0.3 per cent.
Brent crude prices was up 2.3 per cent at $69.30 a barrel, rebounding after a drop of as much as 5.6 per cent on Thursday on rising US inventories and persistent trade war risks.
Snapshot
Thought For A Day
