Market movers today
A very light calendar today albeit watch out for quite a few ECB speakers including Lautenschlager and Praet during the day.
Key releases this week will be US retail sales, German ZEW and the monthly batch of Chinese data for industrial production, fixed investment and retail sales. Further, the US Empire and Philly Fed indices will be key in judging whether the US is weathering the global slowdown as well as has been the case so far. Finally, Fed nominees Clarida and Bowman are due to testify to the US Senate Banking Committee.
The US-China trade talks will also be in focus as China’s top economic adviser and vice premier Liu He is planned to come to the US for further negotiations.
In the Scandi sphere, Sweden releases average house prices and PES unemployment rate.
Selected market news
Following a week where the US withdrew from the Iranian nuclear deal and thus added fuel to a looming deterioration in risk sentiment – which has been building recently by a weakening business cycle – this week looks set to start on a more positive note as hopes of a fading US-China trade war are mounting. In a noteworthy move, US President Trump might have paved the way for more constructive talks this week, when over the weekend he ordered the US Commerce Department to make sure Chinese telecom equipment maker ZTE could be cleared to get supplies from US companies after a ban was set to cripple the company. It seems to have been a demand from China’s president Xi Jinping for China to continue negotiations, see Bloomberg , and Trump has seemingly now provided an outstretched hand to China.
In the euro zone, risk sentiment has so far been largely unmoved by the increasing likelihood of a coalition government formed by the two anti-establishment parties , the Five-Star Movement and Northern League. The two parties are due to present a possible government program today which would reportedly (and unsurprisingly) include cutting taxes and boosting spending. However, Italian government-bond markets – and the single currency – are little moved by this prospect. While the 10Y yield edged a tad higher last week, it currently stands just above the 1.85% mark, notably down from the 2%+ levels seen at the start of the year.
Stock markets have generally had a decent run in both the US and Asian sessions. EM currencies remain wobbly though but the USD momentum has crucially stalled somewhat helped by the US inflation miss last Thursday, and as the US 10Y once again failed to make a firm break of the 3% level last week. Oil prices remain close to USD77/bbl (Brent) and may be coming off a peak as OPEC is keen to stress that it holds the spare capacity to fill in for possible lost Iranian supplies.
