Market movers today
This week has mainly tier-2 data on the agenda, but despite this, interesting developments lie ahead.
Italian politics will remain in focus, even after the coalition deal being reached last week. Attention will be on any comments on policy priorities, particularly whether we will see a toning down of some of the spending proposals. We should also keep an eye on any news from the rating agencies. On Friday, we held a conference call on the development in Italy, which you can listen to here (duration 20 minutes).
Also, the disappointing developments this weekend on the US-China trade conflict will be closely monitored, on top of the already looming EU-US trade war.
In Denmark, FX reserves data for May are due out at 16:00 CEST.
Selected market news
Despite the political turmoil around the globe, markets are mainly positive this morning. Asian stocks are higher and S&P500 futures are also slight ly up. The US 10-year Treasury yield has moved above 2.9%. EUR/USD is trading almost at 1.17 at the time of writing. Some of the positive mood this morning may stem from the strong US jobs report Friday, which was strong in all direct ions: Jobs growth was higher than expected (223,000 versus 188,000 expected), the unemployment rate dropped to 3.8% from 3.9% and average hourly earnings rose 0.3% m/m (0.2% expected).
The US-China meeting on trade ended without any joint statement, as was the case at the last meeting. Much have happened since then, where it seemed we were headed for a solution at the negotiationtable. China has said it will withdraw from its commitments to buy more US backs if the US implements the proposed tariffs on imported goods from China. The US is now fighting the trade war on several fronts: China, EU, Mexico and Canada. The opposition against US protectionism from other countries is also clear form the G7 finance ministers and central bank governors meeting, which concluded this week But to be fair, it is not only the US against the rest , at the moment it seems more like all against all. The EU has for instance complained to the WT O about China’s technology transfer practice (something the US has also criticised China on).
In the UK, the Brexit department’s scenario analyses on ‘no deal’ Brexit has been leaked to The Sunday Times (paywall) and it is not cheerful reading. In the worst scenario (labelled Armageddon), the Dover port will break down on day 1, leading to too little supply of e.g. food and medicine. We st ill believe the probability of a ‘no deal Brexit ‘ is limit ed, but the coming weeks are going to be important , as the next EU summit is approaching (28-29 June).
The Financial Times reports the Italian bank UniCredit may want to merge with Societe General (French bank). Italian banks have been in focus for years due to weak profits, bad loans etc.
