Global bond #yields are on the rise…
Archives of “December 2019” month
rssBOJ statement leaves monetary policy unchanged
Bank of Japan monetary policy statement for their December 2019 meeting
Policy is held steady but there are a few points to note, a little downbeat.
Policy:
- maintains short-term interest rate target at -0.1%
- maintains 10-year JGB yield target around 0%
- maintains forward guidance on interest rates, says they will remain at current or lower levels for as long as needed to guard against risk momentum for hitting price goal may be lost
The injection of 280bn yuan today by the PBOC was the biggest since January. Does it set up a rate cut tomorrow?
A little earlier the People’s Bank of China added 30 bn yuan into money markets via 7 day reverse repos
And 250bn via 14-day RRs.
This follows a big injection yesterday (after 20 consecutive days of no OMOs) and also a (tiny) rate cut on the 14 day yesterday.
Tomorrow (Friday 19 December 2019) we get the month Loan Prime Rate setting from the Bank.
The LPR rate is set by 18 banks with a spread above the one year Medium term Lending Facility.
Global Times says “US impeachment won’t change China’s trade stance”
US President Trump is about to be impeached, but the Global Times says it will not change the overall direction of the bilateral trade relationship
- China has come to the realization that no matter who sits in the White House, whether Republican or Democrat, the US’ ill-advised intention to contain China’s economic and technological rise will not change.
- However, the trade war has also shown that China would never bow to maximum pressure from the US, whether in the form of punitive tariffs or a global crackdown on Chinese technology companies or flagrant intervention in Chinese internal affairs
Fightin’ words.
GT is correct, doesn’t matter if Mr T wins the next election or not – the US and China are on a collision course.
Global Times is a very outspoken and forthright media outlet in China.
Forecasts for the Federal Reserve in 2020 – via UBS
Forecasts from economists at UBS for 2020 (this in brief)
- have upgraded their 2020 GDP forecasts across the board
- to reflect improvement in the macro backdrop
- US growth is still expected to soften into the first half of the year
- maintain call for three Fed cuts next year
Front page of the FT Thursday: EU doubts on deadline to ‘get Brexit done’
Boris has said time and again he is taking the UK out deal or no deal
I do not see where there is room for doubt now he has the numbers in parliament.
Anyway, front page:
Thought For A Day
The euro’s got a Trump problem going into next year
As the US and China look to wrap up the Phase One trade deal, the European Union has got to watch its back next
Although Trump may be largely preoccupied with the US election next year, the temporary ceasefire in US-China trade relations will free up some of his time to focus on other agendas – at least during the early portions of next year.
As such, one key issue that he has yet to seriously address or escalate is the supposed “trade imbalance” that the US has with the European Union. This is something that he has been going on about for quite some time now already:
He has already revealed his intentions recently as he lambasted French president Macron and even threatened tariffs on $2.4 billion worth of French goods. After all, he is a tariff man.
But that’s just the smaller part of the equation. The biggest offender of this “trade imbalance” is not France, but Germany instead.
Germany sits among the top four nations that the US has the largest trade deficit with, and now that Trump has addressed the trade situation with the other three nations (China, Mexico, Japan), they will be up on the chopping board next.
As such, if Trump starts to deal with the European Union in the same way that we have seen the US-China trade war develop, this could arguably be one of the major risk factors for the euro and euro area assets as we look towards next year.
With the German economy barely staying afloat this year, a trade war is the last thing that the country needs. Hence, any nascent signs of an economic recovery may be offset against the backdrop of a looming trade war that could turn even uglier as the year goes by.
Given such a development, it would be hard for the euro to keep a more optimistic tone as this will also take away a key potential tailwind for the single currency in 2020.
Top foreign-exchange forecaster on H1 2020 – bull market for the USD not over
Jane Foley, head of FX strategy at Rabobank, is the highest rankled forex predictor in Bloomberg’s quarterly poll (July-September)
For the first half of next year:
- “If I had to pick out one theme, it would still be the dollar”
- “There’s a possibility the dollar holds stronger than what the market is expecting for the first few months of 2020 and then it weakens, but not as much as the market is anticipating.”
Via Bloomberg, but curiously, found it here at yahoo)
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yeah, it may be too early to write off the US dollar.
Fitch says phase 1 US-China trade deal alone unlikely to eliminate uncertainty
Whole stack of no s**t Sherlock statements from Fitch here:
- phase 1 deal will not resolve US corporates’ trade concerns
- phase one US-China trade deal alone unlikely to eliminate uncertainty given prolonged phase two negotiations on structural issues
- Fitch, on US corporates says renewed escalation of US-China tensions remains a significant risk
- says a ‘phase one’ US-China trade deal may only provide limited benefit for US technology companies
All the disruption for the sale of a few more soybeans to a country that would have bought more anyway. And yeah phase two will be an even bigger debacle.