Market movers today
With few economic releases of notice, the market focus will probably remain on the prospects of China and the US reaching a phase one trade deal anytime soon or whether it risks slipping into next year as some news stories alluded to yesterday.
In the euro area, the minutes from the October ECB meeting are due for release today. The meeting was rather uneventful and we expect the minutes to contain few new insights. However, we will scrutinise the minutes for the Governing Council’s thinking on the QE ISIN limits and any views on whether these self-imposed rules could be bent. Furthermore, the minutes will also reveal whether the frictions in the Government Council we saw after the September meeting still linger.
In Denmark, wage earner employment figures for September are due on Thursday. Employment rose by just 200 in August and job growth has generally stalled over the summer. Hence, the September figures will provide an even better insight into the extent of the slowdown in the labour market.
Selected market news
Despite recent days’ diplomatic tensions between the US and China, following the US senate passing a bill on Tuesday that requires certification of Hong Kong autonomy, the top China trade deal negotiator, Vice Premier Liu He, last night said that he is still ‘cautiously optimistic’ about reaching a phase one deal with the US, according to sources attending a dinner in Beijing. He was also said to put forward plans targeting a liberalisation of capital markets and enforcing intellectual property rights. Elements that are all part of the current negotiations.
Liu He’s comments were not enough, however, to pare losses in equity markets as both the Hang Seng (-1.6%) and Nikkei (-0.8%) took further losses overnight. His comments came after Reuters earlier reported that a phase one deal could be pushed into the new year, citing sources close to the White House. Later in the day the House of Representatives voted 417-1 in favour of the legislation supporting Hong Kong protestors and the legislation could be signed by President Trump already today.
The FOMC minutes released yesterday did not contain much news. According to the minutes, ‘most’ FOMC members think monetary policy is now ‘well calibrated’ after the third cut, which sounds very similar to ‘the current monetary policy stance is appropriate’, as several FOMC members have stated publicly since the meeting. That said, the Fed still sees risks for the economy as tilted to the downside, as the global manufacturing slowdown and global trade tensions may eventually trigger a more broad-based economic slowdown with slower consumer spending growth and/or cutbacks in hiring. The Fed also noticed slower job growth but this was revised away in the October job report released after the meeting.
