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Trump: Hopes for allowing China into WTO have failed

Trump on China at the UN

Trump on China at the UN
  • China hasn’t adopted promised reforms
  • China uses heavy state subsidies, steals IP
  • Cites company stealing Micron’s products in China
  • WTO needs drastic change
  • World’s second-largest economy shouldn’t be allowed to call itself a developing country
  • The days of globalism are over
  • Says he’s placed tariffs on over $500B of Chinese goods
  • Hopefully we can find a deal that’s good for both countries, but I will not accept a bad deal
  • Says carefully watching situation in Hong Kong
  • Expects China to honor treaty on Hong Kong

If you’re China and listening to that, do you really think Trump wants to make a long-term deal?

UK Supreme Court rules prorogation was ‘unlawful’

Ruling announced

  • President Hale says ‘no justification with such an extreme effect has been heard by the court’
  • Prorogation is void and ‘is deemed as null effect’
  • Speakers of Parliament to decide what to do next
  • Court rules no step needed from Johnson
  • Johnson’s lawyer has told court that he would comply with judgment
Therefore, according to the Supreme Court, Parliament is still sitting.
Pressure now on Johnson – will UK Parliament be recalled?
GBPUSD spiked up to 1.2489 since pulling back some gains.
edit: Parliament is deemed to be still sitting, so no recall necessary

Bank of Japan’s Kuroda on the wires

Via Reuters

Kuroda
  • BOJ will ease without hesitation if chance that economy may lose momentum for achieving price goal heightens
  • Economy sustaining momentum for hitting BoJ’s price goal
  • BoJ must pay more attention than before to heightening risks, particular focus in on the output gap
  • If Oil prices continue to fall and clearly push down Japan’s inflation, that could impact inflation expectations
  • No preconception on what policy decision will be made in October
  • Investors risk aversion easing somewhat due to progress in US-China trade negotiations
  • BoJ can combine, enhance tools which are rate cuts increase in asset buying and acceleration of base money
  • Excessive fall in super-long yields could hurt consumer sentiment by lowering returns of pension, insurance funds
  • Our policy is stimulating economy, but increased scrutiny is needed on cost of prolonged ultra low rate environment
  • Overseas economic slowdown yet to affect Japan’s domestic demand
No hints on whether more QE is coming for October, which is what would have weakened JPY further on the current change in sentiment with China waiving some soybean tariffs.
Interesting line about scrutiny on ultra low rate environment. We are starting to see a move away from monetary policy towards fiscal policy. I think it is reasonable expect this to be the next driver in the FX markets now if conditions remain in an ultra low interest environment.

More on those China tariff waiver headlines

Via Reuters

  • China grants tariff waivers for US soybean imports of between 2-3 million tonnes
  • China grants several domestic firms new tariff waivers for US Soybean imports
Nikkei up +0.21%, Hang Seng +0.35% and Shanghai Comp +0.63%. Gentle risk on tones around as JPY and CHF weaken and AUD and NZD strengthen as you would expect for risk on trading.
Via Reuters

A very quick snippet on why the US dollar is more attractive than the euro and yen

Via a longer piece from Nordea on the Fed and ECN balance sheets, these few words seem to be where we are at in a nutshell ….

  • we ultimately think that USD liquidity is king (no one needs all the damn EURs and JPYs that ECB and BoJ are printing)  
Oh dear 😀
—-
OK, here is a little more that, while less pithy, is even more interesting, it follows on from the above:
  • we have found some interesting patterns on TLTRO-settlement days. 
  • On days when EUR liquidity has entered the financial system in size via TLTROs, it has often been a good idea to be long EURCHF and short EURSEK (81% hit ratio) – i.e. risk on! 
  • The first TLTRO-III allotment was though a yuuuge disappointment (a mere 3.4bn EUR), so we don’t expect a big effect when the liquidity enters the system on Wednesday the 25th. 

US President Trump says we are getting along well with North Korea

Given North Korea is continuing to get whatever it wants in developing ballistic missiles and nukes, yes, they are easy to get along with.

More:
  • maybe we will be able to make a deal, maybe not.
On North Korea’s missile tests:
  • says a lot of countries do it
So getting played.
Given North Korea is continuing to get whatever it wants in developing ballistic missiles and nukes, yes, they are easy to get along with.

7 factors buttressing the bullish gold market environment

A brief note via Citi on the gold market, the positive factors for it (numbering is mine, I may have doubled up on a couple but I like “7” … )

  • 1. Low(er) for interest rates
  • 2. escalating global recession risks
  • 3. (exacerbated by US-China trade tensions)
  • 4. heightened geopolitical rifts
  • 5 & 6. amid rich equity and credit market valuations
  • 7. strong central bank and investor buying activity
are all combining to buttress a bullish gold market environment.
We now expect spot gold prices to trade stronger for longer.
And, as for the risk to gold:
  • However, if a hawkish turn from the FOMC may pull back the gold price
A brief note via Citi on the gold market, the positive factors for it (numbering is mine, I may have doubled up on a couple but I like "7" … )