Market movers today
Focus in the markets continues to be on Italy, where bond yields keep surging higher. Developments in the US bond market and the jump in US yields recently are still a theme also. Another key focus in financial markets are renewed signs of testy relations between China and the US.
On the data front, it will be an uneventful day. The US is due to publish the NFIB small business sentiment index, which as many other business surveys is at a very high level.
n Sweden, with focus being on the inflation numbers on Thursday, we will get a couple of interesting speeches from the Riksbank governors; Skingsley (09:00 CEST), Ingves (15:45) and Ohlsson (18:00). For more details, see page 2.
In Norway, the monthly GDP is due to be being released, see page 2.
Selected market news
Asian markets followed US stock markets lower overnight, dragged down by tech companies but also signals of deteriorating diplomatic relations between China and the US following US Secretary of State Michael Pompeo’s visit to China, where the state secretary received a public rebuke from China’s foreign minister. The purpose of the visit was to decide on a date for a future summit between Donald Trump and Kim Jong-un, which now seems uncertain. In another sign of the strained relations between the two countries, according to Bloomberg news, the US treasury department is contemplating whether to name China as a currency manipulator in a report due out next week following the yuan’s sharp depreciation recently.
Overnight, the IMF published its new assessment of the global economy, where it cut its estimate of world economic growth forecasts slightly for both 2018 and 2019 . The IMF now sees global growth at 3.7% in both years, down from 3.9% in April. The main reason is the recent tariff dispute between the US and China and other trade tensions globally. The IMF downgraded as a result in both China and the US. However, the institution also sees signs of slower growth in key emerging markets such as Latin America (Argentina, Brazil, and Mexico), emerging Europe (Turkey), south Asia (India), east Asia (Indonesia and Malaysia), the Middle East (Iran) and Africa (South Africa).
Meanwhile, tensions continue in Europe over Italy’s budget projections. Yesterday, League Leader Salvini signalled no willingness to back down from the government’s expansionary fiscal stance, saying that speculators are ‘wasting time and wasting money because we will not go back’. We think the uncompromising stances from both the EU and the Italian government mean that market sentiment could get worse before it gets better. See our reaction to the Italian budget on Friday here: Italian Politics Monitor – The (budget) genie is out of the bottle.
