Market movers today
The US market is closed due to Labour Day.
As we wrote in Strategy: Global macro themes in H2 18, (geo)politics will remain a hot topic here after the summer holiday.
Italy is in focus after Fitch put the country on negative outlook, and in light of the still wobbly Emerging Market sentiment it will be interesting to see whether a further rise in Turkish inflation today will draw any comments from the central bank and the pressure on the Turkish Lira.
In the UK, the House of Commons returns to session this week after a long holiday. Brexit will probably start to dominate the media coverage again ahead of the end-game in Q4. We believe the GBP will remain weak and volatile until we get more clarification on Brexit.
Global trade war concerns will be in focus later this week, as the hearing period of US tariffs on USD200bn of Chinese goods concludes on Wednesday. Last week, President Trump also reminded us all that there is only a cease fire between the US and EU, as no final deal on trade has been reached.
In terms of economic data releases, we get the August US jobs report on Friday.
Today ‘s Scandi figures include August manufacturing PMIs for both Sweden and Norway. In Sweden in particular, this week is very interesting with the Riksbank rate decision on Thursday and the general election on Sunday.
The geopolitical stand-off between Russia and the US in Syria is escalating. The Syrian war could hit the wires over the next few days, affecting markets through risk sentiment and the oil price.
Selected market news
On Friday, Fitch affirmed Italy’s BBB rating but put the country on negative outlook (from stable) as a consequence of the political uncertainty. This was probably more or less in line with market expectations but may be seen as positive this morning, as it means the risk of any rating downgrades before end-September is low. The full Fitch report can be seen here. Despite Fitch’s decision to delay a downgrade, the Italian-German 10Y bond spread is still trading significantly out of line with European peers. The next key date is the release of t he M inistry of Finance’s p ublic debt and deficit projections on 27 September.
The Chinese Caixin PMI manufacturing fell to 50.6 in August, the weakest since June 2017 with the new orders sub-index at the lowest level since May 2017. Exports have been below 50 for five consecutive months. While it is not surprising the economy is slowing, it is probably slowing at a faster pace than the Chinese government likes now that also trade uncertainties are weighing on the economy. This is also the reason why it has stepped in with easier monetary and fiscal policy. We expect a soft landing.
