Market movers today
Focus today will continue on the Brexit talks ahead of tomorrow’s EU summit and the US-China trade negotiations after Trump tweeted yesterday that there will soon be ‘big announcements’ on this after ‘very productive conversations’.
In terms of data releases, US CPI core inflation data is due out today. We estimate CPI core rose +0.2% m/m in November in line with the recent trend (2.2% y/y).
CPIF inflation data from Sweden is also due for release. We expect it to fall short of the Riksbank’s forecast. We also have a budget vote to look forward to. See the Scandi section for more details.
Selected market news
US equities could not hold on to gains yesterday on the positive trade news. In Asia, however, equities are moving higher again on further trade optimism after the Huawei CFO arrested in Canada was granted bail on Tuesday and Trump said that he would intervene in the case if necessary to ensure a good trade deal , see Bloomberg article, 12 December. Yesterday, there were unconfirmed reports that China would cut US car tariffs from 40% to 15%. This would put US car tariffs in line with tariff rates for other countries, as the general car tariff rate in China was reduced from 25% to 15% on 1 July.
According to Reuters yesterday, some sources say the US considers issuing a travel warning to US citizens travelling to China as they fear a retaliation from the arrest of the Huawei CFO. Canada yesterday confirmed that one of its citizens was detained in China but that it saw no explicit connection to the Huawei case. See the South China Morning Post , 12 December, for more on this story.
In UK Prime Minister Theresa May could be facing her biggest crisis as a confidence vote could be coming, see Bloomberg , 11 December. The GBP fell yesterday in response to the high uncertainty over Brexit as it calls into question her ability to negotiate with EU leaders at the Summit on Thursday if she is to be toppled later internally. However, even if there is enough backing for a confidence vote, it is not clear that she would lose it. It would require a majority among the 315 Conservative members of parliament. EU leaders have been defiant about giving further concessions in talks with May in recent days.
On a more positive note, the German ZEW index for November surprised on the upside yesterday rising to -24.1 to -17.5. It has moved broadly sideways over the past four to five months, pointing to some stabilisation soon in the German slowdown.
