Market movers today
A quiet start to a very busy week. Euro money and credit data is the main data of interest today. M3 growth is expected to rise slightly from 3.7% to 3.8%. Later today, ECB President Mario Draghi will speak at the EP but is unlikely to send any new signals compared to the ECB press conference last week.
Instead, all eyes this week will be on the high level US-China trade talks on Wednesday and Thursday. Negotiations are entering a crucial stage, where the thorny issues are likely to come up.
Other events this week will be: Brexit vote on Tuesday on Prime Minister Theresa May’s Brexit Plan B. See today’s Brexit Monitor: pressure is mounting. FOMC meeting Wednesday, Chinese PMI manufacturing Thursday (NBS) and Friday (Caixin) and US employment report and ISM manufacturing Friday, read more in Weekly Focus.
Selected market news
On Friday, European markets digested the messages from the ECB meeting on Thursday. European yields traded broadly sideways while equities ended in the green across the globe. The EURUSD ended the day around one big figure higher. This morning, positive sentiment dominates the Asian markets, which are generally trading in green.
The partial US government shutdown has ended, at least for three weeks, as US President Trump has given up the wall funding for now. Trump tweeted that the agreement was ‘in no way’ a concession to the democrats. Talking to the WSJ over the weekend, he said that he sees a less than 50/50 chance of a border wall by the deadline, which could force him to use emergency powers.
After mixed signals from Treasury Secretary Steven Mnuchin and Secretary of Commerce Wilbur Ross on Thursday, the US-China talks on Wednesday-Thursday will be key. China’s top trade negotiator, Vice PM Liu He, will meet with US Trade Representative Robert Lighthizer and Mnuchin in Washington. The talks are likely to centre on some of the tough issues in the trade negotiations, such as the Made in China 2025 plan, protection of intellectual property rights (IPR), forced technology transfer and non-tariff barriers.
On Friday, we also had a few ECB speakers out. Most prominent were board member Benoit Coeuré and French central bank governor Villeroy who both stressed that a new liquidity operation would be due to a monetary policy reason. Furthermore, downward revisions of ECB projections were probable. On a side note, Coeuré, who has been mentioned as a potential candidate to replace ECB President Mario Draghi in October, replied rhetorically, ‘who wouldn’t’ accept the ECB presidency if asked.
The German IFO business climate took another dip in January to 99.1, driven mainly by the weaker business expectations dropping from 97.3 to 94.2. Similar to the PMI release on Thursday, the Ifo is signalling that the German economy had a soft start to the year and that a rebound is not yet in sight.
