The global financial markets continue to endure volatile price activity, as the trade war between the US and China continues to dominate. The past week has seen numerous statements, rumours and leaks from both sides, increasing the volatility to markets that were already vulnerable and erratic. This has not just been impacting global stock markets and share indices, but also significantly hitting Government and Corporate Bond markets, Foreign Exchange and Commodity markets.
In fact, the aggressive push lower in yields on US Treasury Bonds, in some instances to historic low yield levels as for the US 30-year Bond, has highlighted threats to both the US and global economy.
Furthermore, a key development this week alongside the plunge in US Treasury yields has been the inversion of the 2-10yr sector of the US yield curve over the past week. This event received much focus from both market participants and the broader media as historically when this segment of the yield curve has inverted in the US, a recession has followed.
In addition, when looking at yield levels, it is not just the US Bond markets in focus, with global bond yields hitting historic low levels, of particular note being the German 10-year Bund.
On the flipside though, China and the US have committed to restarting trade negotiations in the next few weeks, plus the US announced that the latest set of tariffs on Chinses goods would now not be imposed until the end of this year, December 2019.
The US macroeconomic data over the past week has been relatively positive with both US Consumer Price Inflation and US Retail Sales beating estimates.
However, data in Europe continues to disappoint, with German Q-o-Q Gross Domestic Product at -0.1%.
In more recent news on Saturday, the Central Bank in China highlighted reforms to lower interest rates to corporates, which should help global markets start the week with a more positive outlook.
What to Watch
As ever in the current environment, critical to monitor for the week will be any developments on the trade conflict. In addition, from Thursday through to the weekend the Jackson Hole Economic Symposium is taking place with Federal Reserve Chairperson, Jerome Powell set to speak Friday. Prior to that we get the Federal Market Open Committee Meeting Minutes Wednesday and global Purchasing Managers Index data Thursday.
|19th August||No data of note|
|20th August||Reserve Bank of Australia Meeting Minutes|
|21th August||Federal Market Open Committee Meeting Minutes|
|22nd August||Jackson Hole Symposium; Purchasing Managers Index (PMI) global|
|23rd August||Jackson Hole Symposium; Federal Reserve Chairman Powell speaks|
|19th August||BHP Group (UK)|
|20th August||Home Depot (US); Medtronic (US)|
|21th August||Lowe’s (US); Target (US)|
|22nd August||Salesforce (US)|