Archives of “November 21, 2019” day

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OPEC+ reportedly said to have no plans to deepen output cuts in December meeting

  
Analysis, Crude

Reuters reports, citing two sources on the matter

Adding that OPEC+ is likely to extend the existing oil output cuts until June next year when they meet up in Vienna next month.

I don’t think this really comes as much of a surprise to anyone as this is pretty much the baseline expectation going into the meeting. In any case, it presents a chance of an upside surprise if they commit to any form of deeper cuts when the time comes.
But then again, it’s OPEC. There’s always a leak somewhere.

OECD trims 2020 global growth forecast to 2.9% from 3.0% in September

  
Analysis, Economy
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OECD with an updated forecast on the global economic outlook

Global
  • 2019 global GDP growth at 2.9% (unchanged)
  • 2020 global GDP growth at 2.9% (previously 3.0%)
  • 2019 US GDP growth at 2.3% (previously 2.4%)
  • 2020 US GDP growth at 2.0% (unchanged)
  • 2019 China GDP growth at 6.2% (previously 6.1%)
  • 2020 China GDP growth at 5.7% (unchanged)
  • 2019 Eurozone GDP growth at 1.2% (previously 1.1%)
  • 2020 Eurozone GDP growth at 1.1% (previously 1.0%)
  • 2019 UK GDP growth at 1.2% (previously 1.0%)
  • 2020 UK GDP growth at 1.0% (previously 0.9%)
  • 2019 Japan GDP growth at 1.0% (unchanged)
  • 2020 Japan GDP growth at 0.6% (unchanged)
The September forecasts can be found here. If anything, it shows that the dark clouds surrounding the global economy are starting to settle for a bit – not getting significantly worse at the very least.
However, any significant rebound is still far away and needs more convincing so let’s see how sentiment changes if we do or do not get a “Phase One” trade deal.

Senior Chinese diplomat: US actions severely damages bilateral relations

  
  Analysis
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Further comments by senior Chinese diplomat, Wang Yi

  • US has many times interfered with China’s internal affairs
  • US should meet China halfway to build cooperative, stable bilateral relations
A couple of harsher words used there but it is nothing that we haven’t heard of with regards to the passing of the HK bill. It is now down to Trump to sign off on that but that appears to be more of a formality at this point.
USD/JPY has eased back a little to 108.52 now after hitting a high of 108.67 after the Chinese commerce ministry remarks just over an hour ago.

Moody’s cut German banking outlook to negative from stable as profitability weakens

  
  Analysis
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Deposits are proving to be costly for German banks

Germany

Moody’s just revised their outlook for the German banking industry to ‘negative’ from ‘stable’, as they expect German banks’ profitability and overall creditworthiness to weaken in a low interest rate environment.
It’s not exactly blockbuster news but again, it just reaffirms the fact that Germany is resigned to some troubling times ahead as the economy continues to slow down further. In that regard, the lack of fixed income alternatives is also hurting banks.

What yield might Japan’s 50 year bond return?

  
  Analysis

50 year yield via Bloomberg

If Japan do go ahead with a 50 year bond yield, what might that offer investors? Let’s look at Swiss and UK bonds.
In Switzerland bond investors who extend from 30 year bonds to 50 year bonds will receive an extra 7bps.
50 year yield via Bloomberg
In the UK 50 year bonds earn 9bps less than 30 year bonds.
JGB
For Japan, the 40 year bonds currently offer a 3 bps yield more then 30 year bonds, which would indicate that a 50 year Japanese bond should offer even more of a return. So, the short term indication would be for a higher 50 year yield if JGB is sold.

China commerce ministry says rumours about possible disagreements in trade talks are not accurate

  
  Analysis

Risk trades get a bit more of a lift to start the session

  • US, China trade teams will continue close communications
  • Says will strive to reach “Phase One” deal with the US
The context of the situation is that when they were asked about possible disagreements in trade talks, they said that the “outside rumours were not accurate”.
USD/JPY gains a bit more ground to just above 108.60 now with Treasury yields pretty much flat across the curve currently.
Trump
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