Market movers today
Today is rather thin in the way of economic global releases and focus will be on the US decision to start targeting other countries on trade. US President Trump and French President Macron are expected to meet during the NATO leader meeting, which starts today.
Also keep an eye on German politics, in particular whether we should expect the SPD to pull the support for the coalition government at the party congress next weekend.
Riksbank’s Jansson will speak at 14:30 CET today.
In Denmark, the central bank will release its FX reserve data for November.
In case you missed it, we published our semi-annual global economic update yesterday, see Big Picture: Rays of light for the world economy.
Selected market news
With a possible phase 1 deal between the US and China, US President Trump has started targeting other countries. Yesterday, President Trump announced that the US will impose tariffs on steel and aluminium imported from Argentina and Brazil due to ‘massive devaluation of their currencies’. China has substituted away from US soybeans by buying from Brazil and Argentina (US farm states are important for Trump’s re-election chances).
A bigger concern perhaps is that the US has proposed tariffs on roughly USD2.4bn on imported goods from France as a retaliation for France’s decision to implement a digital tax (and is now considering something similar against Austria, Italy and Turkey), see USTR press release . The hearing process will begin on 7 January 2020 and the proposed list of products includes wine, cheese, handbags and makeup, see the preliminary list here . France has so far declined to comment but French president Macron and US President Trump are expected to meet during the NATO leader meeting, which begins today. The Internet Association, which represents tech companies, are calling for a global solution on how to tax tech companies. The conflict with France also increases the risk that the US eventually imposes tariffs on imported cars from Europe.
The Danish minority government reached a budget agreement with a parliamentary majority Tuesday night. As far as we can tell, it will not significantly alter the fiscal stance for 2020, which will be close to neutral, but there are other points of interest. A pack of cigarettes will increase from approximately DKK41 to DKK55 from 1 April 2020 instead of the DKK45 we used as an assumption in our latest inflation forecast. That will lead to about 0.2-0.3pp higher inflation than our call for 1.2% for all of 2020. The government is set to establish a green fund of DKK25bn that will invest in companies supporting the green transition. The fund will be established within the existing network of public investment funds, with more details to follow in 2020. Separate from that, the government will spend DKK1m on investigating the feasibility of green government bonds in Denmark.
