Market movers today
In Sweden , the highlight of the day will be the minutes from the 6 September Riksbank meeting, which will be scrutinised for clues about the next policy step. We will look for an indication of a first policy hike in either December or February.
Trump may announce either today or tomorrow that he is implementing tariffs on an additional USD200bn worth of imported goods from China. According to CNN , the tariff rate is going to be 10% and not 25% as feared previously.
In the euro area , the final HICP figures from August are due. We do not expect any revision to the preliminary release, which saw headline inflation falling back to 2.05% and core inflation disappointing on the downside at 0.96%.
Selected market news
The week kicks off with a negative tone in the financial markets as trade concerns weigh on investors’ risk appetite and Asian stocks trade lower this morning led by markets in Hong Kong and China, while Japanese markets are closed for a holiday.
US-Chinese trade concerns have resurfaced as the Trump administration plans to implement new tariffs on USD200bn worth of Chinese products this week. China may reject new trade talks if more tariffs are imposed, according to a report posted yesterday in the Wall Street Journal . The report quoted one senior Chinese official as saying that the country would not negotiate ‘with a gun pointed to its head’. The Trump administration seems to believe that the trade war is hurting China more than the US, giving the US the upper hand in the negotiations. China has promised to retaliate to any US measures against China one-to-one, and China seems to be preparing itself for a long-lasting trade war by (among other things) easing economic policy. A deal between the US and China seems unlikely before the US mid-term elections in November.
Boris Johnson, the former UK foreign minister, launched yet another attack on Theresa May in his weekly column in the Telegraph on Sunday, saying that ‘we are heading for a car crash Brexit under Theresa May’s Chequers plan’. Brexit will be in focus this week when EU leaders meet in Austria on Wednesday-Thursday. Moreover, the UK Conservative Party remains divided on Brexit, as the hardliners still think PM Theresa May’s Chequers plan is too soft. This could potentially trigger a leadership challenge by Boris Johnson.
The Bank of Russia (CBR) surprised markets by hiking its key rate by 25bp to 7.50% on Friday. While an unchanged rate would already mean continuation of CBR’s hawkish monetary stance, the central bank governor, Elvira Nabiullina, went even further and did not rule out the possibility of more rate hikes, but sees no cuts until 2020. We do not exclude further monetary tightening by the CBR in 2018, seeing the RUB as weaker due to a possible sell-off on new sanctions
