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Eurozone Q1 GDP second estimate +0.4% vs +0.4% q/q prelim

  
Analysis, Economy

Latest data released by Eurostat – 15 May 2019

  • GDP +1.2% vs +1.2% y/y prelim
Preliminary figures can be found here. The figures here are in-line with initial estimates, so it isn’t really telling us anything new with regards to the Eurozone Q1 economic performance. Similar to Germany, expect things to get tougher as the outlook remains blurry with US auto tariffs due and US-China trade tensions still prevailing.
EUR/USD currently holds at 1.1214, bound by a tight range on the day still. EUR/GBP sits at 0.8684, little changed on the session.

Chinese can sell debt to support Yuan (not just to punish the US)

  
Analysis, Economy

Via Bloomberg

Yuan and trade war

As the trade war has continued there has been a sell off in the Yuan which you can see here on the USD/CNY chart.

why does China want a weak Yuan

Price has sliced through a series of daily pivot points as Yuan weakness has taken hold.  On the face of it this helps Chinese exports, but this is not Beijing’s desire to have a much weaker Yuan. The reason is that China has prioritised curbing financial risks and the strategic goal of creating a global, stable currency. The last thing it wants is wild swings in the Yuan. Have a quick read about that here from the South China Post.  (more…)

US-China trade talks reportedly broke down as China scrapped 30% of draft deal

  
Analysis, Economy

The Nikkei Asian Review reports

US China

The report says that China returned a significantly reduced version of the US draft, which then drew the ire of Trump in raising tariffs on $200 billion of Chinese goods. Adding that the original 150-page document was then cut up and reduced to just 105 pages.

Citing unnamed sources, the report goes on to say that the collapse of the negotiations was predetermined by China scrapping as much as 30% of the original draft text.
This isn’t really fresh news as we had heard of something similar last week here. However, it just further confirms that the two countries are still far apart from striking a compromise at this current point in time.
Given that last week’s talks in Washington failed to bear fruit, the stalemate between the US and China certainly looks set to drag on for quite a while now. As mentioned before, both sides are done playing nice for the time being and will poke at each other until something or someone gives way down the road.

Theresa May said to be close to setting out timetable for her departure

  
Analysis, Economy

She’s facing increasing pressure from the 1922 Committee to provide more details on when she will be leaving her post

May

The above is according to The Sun’s political editor, Tom Newton Dunn, adding that the 1922 Committee chairman, Graham Brady, had a “very productive” conversation with May earlier and will await firm thoughts on her departure in the near future.
It’s a case now that if May fails to provide much clarity surrounding her leave date soon, the committee will decide her fate for her and overthrow the leadership challenge rules in order for the Tory party to call on a confidence vote against May again.

China trade data for April: CNY 93.6bn (vs. expected 216.75bn

  
Analysis, Economy

China trade data for April 2019

Yuan terms
China trade balance: CNY 93.6bn … miss
  • expected CNY 216.75bn, prior was CNY 221.23bn
Exports +3.1% y/y: … miss
  • expected 8.0%, prior was 21.3%
Imports +10.3% y/y: … a beat and augurs well for the domestic economy
  • expected 3.0%, prior was -1.8%

USD terms (these may be later)

China trade balance: USD 13.84bn … miss
  • expected $ 34.56bn, prior was $32.67bn
Exports: -2.7% y/y … miss
  • expected 3.0%, prior 14.2%
Imports: +4.0% y/y … beat
  • expected -2.1%, prior was -4.8%
Chinese data … questions on their veracity are never far away. But … the weaker exports might give them some breathing space at trade talks this week?
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