Sat, Mar 25, 2023 @ 11:12 GMT

EU Malmstrom preparing a list of rebalancing measures for US auto tariffs

    EU Trade Commissioner Cecilia Malmstrom said today that while she hoped Commission President Jean-Claude Juncker’s visit to the US on July 25 could ease trade tensions, the EU is prepared for retaliation. She said that “if the U.S. would impose these car tariffs that would be very unfortunate. We are preparing together with our member states a list of rebalancing measures there as well. And this we have made that clear to our American partners.” And she added that “it is done in the same way as with steel and aluminum.”

    Also, regarding Juncker’s visit, she said it’s to “try to establish a good relations, try to see how we can de-escalate the situation, avoiding it going further and see if there is a forum where we can discuss these issues.” She added that “we don’t go there to negotiate anything.”

    Juncker himself said he’s “upbeat and related” ahead of the trip to Washington. He also emphasized that “we will continue to react tit-for-tat to the provocations that might be thrown at us.” And, “when it comes to trade, the European Union, its internal market, its single market, form an indivisible unity and it’s the Commission that is in charge of articulating trade policy. All efforts to divide the European Union are in vain.”

    Dollar surges as US-China trade spat heats up again

      Dollar rises broadly today as trade spat between US and China heated up again. It’s started yesterday when Trump’s economic advisor Larry Kudlow blamed Chinese President Xi Jinping for for holding back the trade deal with the US. The timing of such accusation is a bit odd, sounding like it’s out of nothing. Nevertheless, it doesn’t occupy a lot of air time except that such comments triggered some nerves of Chinese government officials. For the Americans, their focuses seem to be staying on Trump’s summit with Putin.

      Anyway, Chinese Foreign Ministry Hua Chunying said in a regular press briefing today that Kudlow “unexpectedly distorted the facts and made bogus accusations is shocking and beyond imagination.” And, “the United States’ flip-flopping and promise-breaking is recognized globally.” And, “in the face of people all over the world, it is shocking that the relevant US officials have turned black and white and reversed it.”

      She added that “the US behavior can only seriously damage its own reputation once again, and it is completely unhelpful to solve the problem.” Hua also reiterated China’s position that “do not want to fight, not afraid to fight.”

      Trade war has so far been supporting Dollar. And it seems like, the more noise, the more strength for the greenback.

      Sterling lower after retail sales miss, but loss is limited

        Sterling suffers some selloff after worse than expected June retail sales data.

        Retail sales including fuel dropped -0.5% mom, well below expectation of 0.2% mom growth. For the year, Sale including fuel rose 2.9% yoy, missing expectation of 3.7% yoy.

        Retail sales excluding fuel dropped -0.5% mom, well below expectation of 0.2% mom growth. For the year, Sale excluding fuel rose 3.0% yoy, missing expectation of 3.5% yoy.

        While the pound dips broadly after the release, selloff is not too serious. In particular, Australian Dollar reversed earlier gains and takes New Zealand Dollar lower with it.

        EU Moscovici urges a gateway out of spiral of trade tension escalation

          European Commissioner for Economic and Financial Affairs Pierre Moscovici warned in a newspaper interview that trade tension between the US and EU would hit the financial markets. He said “an escalation – no matter from which side – would have serious consequences for the economy, including for the financial markets, which would hurt all sides.”

          He urged “that’s why we need a gateway to get out of this spiral that ultimately damages the global economy and pulls everyone down with it.”

          Swiss FM Maurer: We’d like EURCHF at 1.2 but 1.16 is liveable

            Switzerland’s Finance Minister Ueli Maurer said yesterday that the Swiss Franc is still overvalued relative to Euro. He noted that “we like more 1.20 but at the moment we have 1.16”. Nonetheless, “we can live with this, I think.”

            Maurer sounds he’s still unhappy with the huge balance sheet of SNB. He noted that “of course with all this intervention, we have a big, big balance sheet, but that’s a result of the policy of the last year and the pressing of the Swiss franc and the weakness of the euro.” But overall, Maurer said he believed the central bank and it had “made good policy”.

            Japan logged JPY 721.4B surplus in June, exports grew 19th straight month

              Japan trade balanced turned back into surplus at JPY 721.4B in June, above expectation of JPY 534.2B. Total exports rose 6.7% yoy, slightly below expectation of 7.0% yoy. But imports rose just 2.5% yoy, below expectation of 5.3% yoy.

              Total exports logged a 19th straight month of growth. Rising trade tension with the US is not having much realized impact so far. Exports to China rose 11.1% yoy, to EU rose 9.3% yoy. Meanwhile, exports to US dropped -0.9% yoy.

              Japan is still facing impacts from US steel and aluminum tariffs and threats on auto tariffs. The the blockbuster trade deal with EU just signed earlier this week should provide enough optimism to offset those threats.

              Australian Dollar jumps as employment data strong on all front

                Australian Dollar surges broadly as June employment data came in strong on all front.

                Headline job grow jumped to 50.9k seasonally adjusted , well above expectation of 16.6k. Prior month’s figure was also revised slightly up by 12k to 13.5k. Full time jobs grew 41.2k while part time jobs also rose 9.7k. Together with the surge in full time jobs, total hours worked rose 0.6%

                Unemployment rate remained unchanged at 5.4%. But without rounding, it’s actually the at its lowest since November 2012. Labor force participation rate rose 0.2% to 65.7%. Employment to population ratio also rose 0.2% to 62.1%.

                Also from Australia, NAB Quarterly Business Confidence dropped to 7 in Q2.

                AUD/NZD rebounded ahead of 1.0844 support and retained near term bullishness in the cross. Price actions from 1.0991 short term top now look more like a consolidation pattern. Focus is back on 61.8% retracement of 1.1289 to 1.0486 at 1.0982. Firm break there will resume the whole rise from 1.0486.

                US Ross said it will conduct section 232 national security probe on uranium imports

                  US Commerce Secretary Wilbur Ross indicates today that the country is heading towards more trade protectionism. Another Section 232 national security probe was triggered, as prompted by two U.S. uranium mining companies, Ur-Energy Inc and Energy Fuels Inc. Both companies complained that subsidized foreign competitors have caused them to cut capacity and lay off workers.

                  Ross said that “the Department of Commerce’s Bureau of Industry and Security will conduct a thorough, fair, and transparent review to determine whether uranium imports threaten to impair national security.”

                  China to take further action to balance impact of US steel tariffs

                    The Chinese Ministry of Commerce said in a statement today that it will take “further actions” to balance the impacts of the US section 232 steel and aluminum tariffs. It condemns the US of using “national security” as excuse for practicing trade protectionism. And criticized the steel tariff measures are a ” a serious damage to multilateral trade rules and undermine the legitimate rights and interests of WTO members”. Further then that, the US “refused to respond” to Chin’s WTO complaints.

                    The news apparently gives Yen a lift. But a bit more time is needed to gauge if China is getting out from the quiet mode against the US on trade war.

                    Full statement here, in simplified Chinese.

                    Into US session: Swiss Franc as strong as Dollar, Sterling selloff accelerates

                      Entering into US session, Sterling remains the weakest one for today as selloff accelerates after CPI miss. Technically, GBP/USD’s break of 1.3048 confirms resumption of fall from 1.4376. EUR/GBP is extending the rebound from 0.8620 even though momentum is weak. GBP/JPY’s break of 147.63 minor support suggests short term topping at 149.30, ahead of 149.99 resistance. GBP/CHF is on the verge of breaking 1.3022 to resume down trend from 1.3854.

                      On the other hand, Dollar and Swiss Franc are taking turn to be the strongest one for today. USD/JPY has taken the lead earlier this week, then followed by GBP/USD in breaking out. Focus will now be on which pair to follow, EUR/USD, AUD/USD or USD/CAD. But at the same time, the strength in Swiss Franc is worth a note. EUR/CHF is now pressing 1.1618 minor support. Break there will be an early signal of completion of whole corrective rise from 1.1366. And in that case, we’d see the cross heads back to 1.1366 low.

                      GBPCHF downside breakout imminent with today’s Sterling selloff

                        GBP/CHF’s sharp fall this week now argues that the consolidation pattern from 1.3049 is completed at 1.3265, after failing to sustain above 55 day EMA. Immediate focus is back on 38.2% retracement of 1.1638 (2016 low) to 1.3854 (2018 high) at 1.3007, which is also close to 1.3 psychological level. Decisive break there will carry larger bearish implications and affirm the case that whole rise from 1.1638 has completed at 1.3854.

                        In that case, next near term target is 61.8% projection of 1.3854 to 1.3049 from 1.3265 at 1.2768. We’d actually expect deeper fall to 100% projection at 1.2460 in medium term. That is close to 61.8% retracement of 1.1638 to 1.3854 at 1.2485. For position trading, one can consider selling at market, with a tight stop above today’s high at 1.3140, with the above two projection levels at first and second targets.

                        Sterling selloff accelerates as CPI unchanged at 2.4%, core CPI slowed to 1.9%

                          Sterling drops sharply as consumer inflation missed market expectations.

                          Headline CPI was unchanged at 2.4% yoy in June, below expectation of 2.6% yoy.

                          Core CPI slowed to 1.9% yoy, down from 2.1% and missed expectation of 2.2%.

                          RPI accelerated to 3.4% yoy, up from 3.3% yoy but missed expectation of 3.5% yoy.

                          Also from UK:

                          PPI input rose to 10.2% yoy, up from 9.6% yoy and above expectation of 10.2% yoy.

                          PPI output rose to 3.1% yoy, up from 3.0% yoy but missed expectation of 3.2% yoy.

                          PPI output core was unchanged at 2.1%, below expectation of 2.3%.

                          BoE policymaker are likely disappointed by the lack of pick up in inflation. Is an August rate hike still on the table? This is now a question to consider.

                          GBP/USD breaks 1.3048 low and it’s now on course for 1.2874 fibonacci level.

                          Sterling stabilized as May narrowly avoided defeat on Brexit trade bill

                            Sterling dropped sharply overnight after Prime Minister Theresa May suffered unexpected defeat on one amendment on the Brexit Trade Bill in the parliament. That amendment requires the government to take “all necessary steps” to join the European medicines regulatory framework. The Pound the stabilized after May narrowly defended the main amendment to the trade bill by 307 to 301 votes. That amended required the government to negotiate a customs union arrangement with EU if by January 21, 2019, it failed to negotiate a deal of frictionless trade for goods.

                            Sterling is holding above 1.3048 against Dollar for the momentum while EUR/GBP’s breach of 0.8901 was, so far, weak. At least for now, May’s position is still safe and she’s avoided a confidence vote. Nevertheless, the tight voting of Monday and Tuesday showed how divided the pro- and anti-EU camps are and it’s like an impossible task to bridge between them. A confidence vote on May could happen any time should she slip.

                            Kansas City Fed George: Both upside and downside risks are significant

                              Kansas City Fed President Esther George “Threading the Needle” that the US economy is in “excellent” shape and “appears to be firing on all cylinders”. Her baseline outlook is for the expansion to “continue at a moderate pace”. And monetary policy “will need to move from an accommodative stance to a more neutral stance”. But future policy actions will “increasingly need to be data dependent.”

                              But there is “considerable uncertainty” on where the “neutral policy rate” is. “Various structure changes” suggested the neutral rate is “lower” than in the past. But “cyclical factors” could have partially offsetting that while “fiscal stimulus” is like raising the neutral rate. Likewise, the natural rate of unemployment is uncertain too and “monetary policy is currently testing the limits of how low unemployment can go without causing an undesirable increase in inflation.”

                              Risks to the outlook “appear balanced” but George emphasized that both upside and downside risks are “significant”. The “predominant upside risks” are “pro-cyclical U.S. fiscal policy and globally accommodative monetary policies.” The government’s tax cuts and increased spending during a “business cycle expansion … may have the short-run benefit of promoting spending and, perhaps, increasing the economy’s longer-run growth potential”. But, “they also carry a risk of pushing the economy beyond its productive capacity.”

                              The “predominant downside risks come from uncertainty around trade policy.” She hasn’t incorporate any significant effect into her outlook yet. But anecdotal reports from our business contacts suggest that some companies are taking a “wait and see” approach to new capital spending due to uncertainty about future trade policies.” And, “whether this will materially slow the economy over the next couple of years or threaten the sustainability of the expansion is something that I will be monitoring carefully.

                              Full speech here.

                              Gold heading to 1172 after disappointing rebound

                                Gold’s strong break of 1236.66 today confirms resumption of whole decline from 1365.24, after a rather disappointing decline. It also confirms that medium term rise from 1122.81 has completed at 1365.24. And more importantly, it also affirm the view that price actions from 1046.54 low are corrective in nature, as was limited by 38.2% retracement of 1920.94 to 1046.54 at 1380.56.

                                For the near term to medium term further fall is now in favor to 61.8% retracement of 1045.54 to 1375.15 at 1172.69. There is also risk of revisiting 1046.54 low, depending on downside momentum. Such development will be an indication of underlying dollar strength.

                                From Powell’s Q&A: Yield at long end indicates neutral rates, protectionist countries have done worse

                                  Fed Chair Jerome Powell’s Q&A in the Congressional Testimony was composed and balanced, while being upbeat as expected. Regarding the “hot” topic of flattening yield curve and recession, he didn’t reply directly. Instead, he acknowledged the there are a lot of discussions. But what matters is the yield at the long end as an indication of the so called neutral rate. Right now, 30 year yield is at around 2.96 after hitting as high as 3.247 earlier this year. 10 year yield is at around 2.85 after hitting as high as 3.115. So, 2.75-3.00% is probably the neutral rate to Powell, rather than 2.50-2.75%.

                                  Regarding US trade policy, Powell didn’t comment directly as expected too. It should be reminded that Powell has already made his stance clear before. He doesn’t comment on policies he doesn’t make. And to guard the line of independence of Fed, he has to refrain from commenting on the administration’s policies too. Instead, he takes them as given.

                                  Though, he was willing to talk about trade from “principles” perspective. And to him, countries that embraced free trade and low tariffs used to have better results and higher productivity. Countries that have been more protectionist “have done worse”.

                                  EU Juncker will visit Trump on July 25 for trade and economic partnership

                                    According to a European Commission Statement, its president Jean-Claude Juncker will visit Trump in Washinton on July 25. The topics of discussion include foreign and security policy, counterterrorism, energy security, and economic growth, as well as trade and economic partnership.

                                    Here is the full statement.

                                    Statement on the visit of President Juncker to Washington

                                    Brussels, 17 July 2018

                                    President Jean-Claude Juncker will travel to Washington on 25 July 2018 where he will be received by President Donald J. Trump at the White House.

                                    The two leaders will discuss the deep cooperation between the European Union and the United States government and institutions across a wide range of priorities, including foreign and security policy, counterterrorism, energy security, and economic growth.

                                    President Juncker and President Trump will focus on improving transatlantic trade and forging a stronger economic partnership.

                                    Fed chair Powell’s opening remarks in Congress testimony

                                      Key takeaways from Powell’s opening remarks:

                                      With appropriate monetary policy, the job market will remain strong and inflation will stay near 2 percent over the next several years.

                                      Risk of the economy unexpectedly weakening as roughly balanced with the possibility of the economy growing faster than we currently anticipate.

                                      The best way forward is to keep gradually raising the federal funds rate.

                                      Here are the full remarks:

                                      Semiannual Monetary Policy Report to the Congress

                                      Chairman Jerome H. Powell

                                      Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, Washington, D.C.

                                      Good morning. Chairman Crapo, Ranking Member Brown, and other members of the Committee, I am happy to present the Federal Reserve’s semiannual Monetary Policy Report to the Congress.

                                      Let me start by saying that my colleagues and I strongly support the goals the Congress has set for monetary policy–maximum employment and price stability. We also support clear and open communication about the policies we undertake to achieve these goals. We owe you, and the public in general, clear explanations of what we are doing and why we are doing it. Monetary policy affects everyone and should be a mystery to no one. For the past three years, we have been gradually returning interest rates and the Fed’s securities holdings to more normal levels as the economy strengthens. We believe this is the best way we can help set conditions in which Americans who want a job can find one, and in which inflation remains low and stable.

                                      I will review the current economic situation and outlook and then turn to monetary policy.

                                      Current Economic Situation and Outlook

                                      Since I last testified here in February, the job market has continued to strengthen and inflation has moved up. In the most recent data, inflation was a little above 2 percent, the level that the Federal Open Market Committee, or FOMC, thinks will best achieve our price stability and employment objectives over the longer run. The latest figure was boosted by a significant increase in gasoline and other energy prices.

                                      An average of 215,000 net new jobs were created each month in the first half of this year. That number is somewhat higher than the monthly average for 2017. It is also a good deal higher than the average number of people who enter the work force each month on net. The unemployment rate edged down 0.1 percentage point over the first half of the year to 4.0 percent in June, near the lowest level of the past two decades. In addition, the share of the population that either has a job or has looked for one in the past month–the labor force participation rate–has not changed much since late 2013. This development is another sign of labor market strength. Part of what has kept the participation rate stable is that more working-age people have started looking for a job, which has helped make up for the large number of baby boomers who are retiring and leaving the labor force.

                                      Another piece of good news is that the robust conditions in the labor market are being felt by many different groups. For example, the unemployment rates for African Americans and Hispanics have fallen sharply over the past few years and are now near their lowest levels since the Bureau of Labor Statistics began reporting data for these groups in 1972. Groups with higher unemployment rates have tended to benefit the most as the job market has strengthened. But jobless rates for these groups are still higher than those for whites. And while three-fourths of whites responded in a recent Federal Reserve survey that they were doing at least okay financially in 2017, only two-thirds of African Americans and Hispanics responded that way.

                                      Incoming data show that, alongside the strong job market, the U.S. economy has grown at a solid pace so far this year. The value of goods and services produced in the economy–or gross domestic product–rose at a moderate annual rate of 2 percent in the first quarter after adjusting for inflation. However, the latest data suggest that economic growth in the second quarter was considerably stronger than in the first. The solid pace of growth so far this year is based on several factors. Robust job gains, rising after-tax incomes, and optimism among households have lifted consumer spending in recent months. Investment by businesses has continued to grow at a healthy rate. Good economic performance in other countries has supported U.S. exports and manufacturing. And while housing construction has not increased this year, it is up noticeably from where it stood a few years ago.

                                      I will turn now to inflation. After several years in which inflation ran below our 2 percent objective, the recent data are encouraging. The price index for personal consumption expenditures, which is an overall measure of prices paid by consumers, increased 2.3 percent over the 12 months ending in May. That number is up from 1.5 percent a year ago. Overall inflation increased partly because of higher oil prices, which caused a sharp rise in gasoline and other energy prices paid by consumers. Because energy prices move up and down a great deal, we also look at core inflation. Core inflation excludes energy and food prices and generally is a better indicator of future overall inflation. Core inflation was 2.0 percent for the 12 months ending in May, compared with 1.5 percent a year ago. We will continue to keep a close eye on inflation with the goal of keeping it near 2 percent.

                                      Looking ahead, my colleagues on the FOMC and I expect that, with appropriate monetary policy, the job market will remain strong and inflation will stay near 2 percent over the next several years. This judgment reflects several factors. First, interest rates, and financial conditions more broadly, remain favorable to growth. Second, our financial system is much stronger than before the crisis and is in a good position to meet the credit needs of households and businesses. Third, federal tax and spending policies likely will continue to support the expansion. And, fourth, the outlook for economic growth abroad remains solid despite greater uncertainties in several parts of the world. What I have just described is what we see as the most likely path for the economy. Of course, the economic outcomes we experience often turn out to be a good deal stronger or weaker than our best forecast. For example, it is difficult to predict the ultimate outcome of current discussions over trade policy as well as the size and timing of the economic effects of the recent changes in fiscal policy. Overall, we see the risk of the economy unexpectedly weakening as roughly balanced with the possibility of the economy growing faster than we currently anticipate.

                                      Monetary Policy

                                      Over the first half of 2018 the FOMC has continued to gradually reduce monetary policy accommodation. In other words, we have continued to dial back the extra boost that was needed to help the economy recover from the financial crisis and recession. Specifically, we raised the target range for the federal funds rate by 1/4 percentage point at both our March and June meetings, bringing the target to its current range of 1-3/4 to 2 percent. In addition, last October we started gradually reducing the Federal Reserve’s holdings of Treasury and mortgage-backed securities. That process has been running smoothly. Our policies reflect the strong performance of the economy and are intended to help make sure that this trend continues. The payment of interest on balances held by banks in their accounts at the Federal Reserve has played a key role in carrying out these policies, as the current Monetary Policy Report explains. Payment of interest on these balances is our principal tool for keeping the federal funds rate in the FOMC’s target range. This tool has made it possible for us to gradually return interest rates to a more normal level without disrupting financial markets and the economy.

                                      As I mentioned, after many years of running below our longer-run objective of 2 percent, inflation has recently moved close to that level. Our challenge will be to keep it there. Many factors affect inflation–some temporary and others longer lasting. Inflation will at times be above 2 percent and at other times below. We say that the 2 percent objective is “symmetric” because the FOMC would be concerned if inflation were running persistently above or below our objective.

                                      The unemployment rate is low and expected to fall further. Americans who want jobs have a good chance of finding them. Moreover, wages are growing a little faster than they did a few years ago. That said, they still are not rising as fast as in the years before the crisis. One explanation could be that productivity growth has been low in recent years. On a brighter note, moderate wage growth also tells us that that the job market is not causing high inflation.

                                      With a strong job market, inflation close to our objective, and the risks to the outlook roughly balanced, the FOMC believes that–for now–the best way forward is to keep gradually raising the federal funds rate. We are aware that, on the one hand, raising interest rates too slowly may lead to high inflation or financial market excesses. On the other hand, if we raise rates too rapidly, the economy could weaken and inflation could run persistently below our objective. The Committee will continue to weigh a wide range of relevant information when deciding what monetary policy will be appropriate. As always, our actions will depend on the economic outlook, which may change as we receive new data.

                                      For guideposts on appropriate policy, the FOMC routinely looks at monetary policy rules that recommend a level for the federal funds rate based on the current rates of inflation and unemployment. The July Monetary Policy Report gives an update on monetary policy rules and their role in our policy discussions. I continue to find these rules helpful, although using them requires careful judgment.

                                      Thank you. I will now be happy to take your questions.

                                      EU- Japan free trade agreement will create a trade zone of 1/3 world GDP

                                        More on the EU-Japan summit in Tokyo today.

                                        Main results

                                        EU and Japanese leaders signed two landmark agreements to increase their cooperation at the 25th EU-Japan summit:

                                        1) The EU-Japan free trade agreement will remove 99% of tariffs paid by EU companies exporting to Japan. It sends a clear message that the EU and Japan stand together against protectionism.

                                        2) The EU-Japan strategic partnership agreement will boost cooperation between both sides on a wide range of issues beyond trade, such as:

                                        • security and defence
                                        • energy and climate
                                        • people-to-people exchanges

                                        On trade

                                        Leaders signed the EU-Japan free trade agreement (FTA), the largest trade deal ever negotiated by the EU. It will create a trade zone covering 600 million people and nearly a third of global GDP.

                                        Once fully implemented, the free trade agreement will remove most of the duties that EU companies pay annually to export to Japan. It will also eliminate several regulatory barriers.

                                        In addition, both sides reaffirmed their commitment to fight protectionism and to defend the rules-based international trading system. They committed to modernise the World Trade Organisation in line with the conclusions of the Charlevoix G7 Summit.

                                        On cooperation

                                        The EU-Japan strategic partnership agreement was also signed at the summit. This agreement will take the EU’s longstanding partnership with Japan to a new level, with deeper and more strategic cooperation:

                                        Both sides reaffirmed their strong commitment to implement the Paris agreement on climate change by focussing on emission reduction and improving energy efficiency.

                                        Leaders also welcomed the conclusion of the talks on an adequate level of data protection by the EU and Japan. This should create the world’s largest area of safe data transfers with a high level of data protection.

                                        On foreign and security policy

                                        EU and Japanese leaders discussed a range of regional and international issues, including the denuclearisation of the Korean Peninsula:

                                        Both sides also reiterated their support to the Iran nuclear deal (JCPOA) as well as to Ukrainian sovereignty, independence and territorial integrity.

                                        More information here.

                                        Into US session: Dollar regains some ground as Fed Powell testimony awaited

                                          Entering into US session, New Zealand Dollar remains the strongest one as supported by improvement in RBNZ’s own preferred core inflation measure. Swiss Franc is trading as the second strongest one, partly on speculation that SNB could start to raise interest rate finally by the end of 2019. Dollar’s fortune reversed as markets await Fed chair Jerome Powell’s Congressional testimony. Meanwhile, Sterling is trading as the weakest one, receiving no support from an after all solid set of job data. Yen follows as the second weakest.

                                          In other markets, Nikkei closed up 0.44% at 22697.36 today, but that came after hitting as high as 22832.22. Singapore Strait Times was up 0.21% at 3239.64. China Shanghai SSE pared back much losses to closed down -0.57% at 2798.13, barely unable to regain 2800 handle. WTI crude oil continues to press 68 handle while gold gyrates around 1240.

                                          Today will begin Powell’s two-day testimony, starting with Senate Banking Committee. House Financial Services Committee comes tomorrow. Expectation is rather low on the event. Fed’s rate path is clear for the near term, that is two more hikes in 2018. Recent economic data support the path, with solid job market and improving inflation. Powell will most likely reiterate the views as see in the minutes of the June 13 FOMC meeting.

                                          Nonetheless, his views on the topic of flattening or even inverting yield curve might raise some eyebrows. Minneapolis Fed President Neel Kashkari said in an essay released yesterday that ‘This time is different’ are the four most dangerous words, in response to those who tried to talk down flattening yield curve and the link to recession. So, to Powell, it’s this time the same? Or is it different?