A key focus once more over the past week have been the trade talks between China and the US, as negotiators are still working on phase one trade deal. Broadly speaking, the sounding from both sides have been very positive throughout the past week, interrupted by a couple of blips. At one point there was rumour of a delay to a deal signing from November back to December. However, the most positive outflow of conjecture was that both sides were considering the rolling back of tariffs as part of the deal, although President Trump did say Friday that he had not agreed to tariffs removal.
The broad market impact from this geopolitical development was for equities to continue their march higher, as European and Asian stock averages hit multi-month peaks, whilst the US benchmarks, including the S&P 500 and Nasdaq hit fresh record highs.
In addition, US Treasury Bonds have plunged lower in price, with the moves to higher yields echoing the “risk-on” theme, alongside a more positive outlook seen for the US economy since the very strong US Employment report from early November.
The aggressive move to higher US bond yields has also assisted a strengthening of the US Dollar, as there is a growing projection that the US Fed is done with their interest rate cuts, during the current “mid-cycle adjustment”.
On the data side, the past week had generally seen Purchasing Managers Index (PMI) data from Markit and in the US from the Institute of Supply Management supportive of the view of a strong US economy and a global economy that is starting to improve.
The enquiry into the impeachment of President Trump in the US is ongoing and getting close to a point where financial markets could be impacted. Into year-end and early 2020, this could be a key even impacting asset values.
In the UK, the general election campaigns have started with the electioneering and opinion polls now likely eclipsing Brexit into the 12th December 2019 polling day (although obviously, Brexit is a key campaign issue).
What to Watch
The macroeconomic data calendar is very busy this week, across the major global economies (see table for details).
The talks between China and the US will remain critical to monitor this week US-Sino. Also, on the geopolitical front, UK opinion polls and the campaigns regarding the December general election could be important.
The Reserve Bank of New Zealand (RBNZ) interest rate decision is on Wednesday; US Fed Chairman Jerome Powell testifies on Wednesday and Thursday to Congress.
It is Veterans Day in the US on Monday with the US Bond market closed, although US share markets are open.
|11th November||UK GDP, Manufacturing and Industrial Production|
|12th November||UK Employment report; German ZEW Survey|
|13th November||RBNZ interest rate decision; German, UK and US CPI; Jerome Powell testifies before Congress|
|14th November||Japanese GDP; Australian Employment; China Industrial Production and Retail Sales; German and Eurozone GDP, UK Retail Sales; US PPI; Jerome Powell testifies before Congress|
|15th November||US Retail Sales and Industrial Production|