Market movers ahead
- Focus in China will continue to be on the US-China trade talks as we approach the 1 March deadline next week. High-level trade talks are likely to continue but we do not expect a final deal to be concluded by 1 March.
- In the US, a number of data releases are scheduled for next week, including PCE core inflation, ISM manufacturing and the housing market numbers. Furthermore, Powell testifies before the Senate Banking panel and House Financial Services committee.
- The UK focus remains on Brexit. Next week there will be a second so-called ‘meaningful vote’ on a full Brexit deal on Tuesday 26 February if PM Theresa May is able to secure a new deal with the EU27 (not the case at the time of writing).
Weekly wrap-up
- Economic data was mixed this week but we see tentative signs of a bottom. Chinese credit jumped higher in January and metal prices continue to send an early signal of a bottom in Chinese growth soon (see Market Movers). Euro PMI data also surprised on the upside, driven by a strong services PMI reading.
- On the Brexit front, things still look uncertain. Sentiment improved a little this week after UK Prime Minister Theresa May had talks with EU President Jean-Claude Juncker, which were described as ‘constructive’.
- Trade talks are entering a critical phase as we near the 1 March deadline. For the third consecutive week, the US and China negotiated at the top level. This suggests to us that commitment to reach a deal soon is very high.
