TODAY

07 Aug 19 (overnight)
– Fed’s Bullard (voter):  – Trade uncertainty likely to linger for years to come  – Fed can’t react to daily ‘give and take’ between major trading partners like US and china  – Monetary policy ‘considerably’ looser today than as of late last year  – Further rate action may be ‘desirable,’ but economy still adjusting to Fed’s shift as of early this year from raising rates to lowering them  – Fed policy has already adjusted to the fact that trade uncertainty will remain high  – Does not see conditions that would warrant a half a percentage point cut all at once  – Will have to see how data ‘rolls in’ before deciding whether appropriate to reduce rates at fed’s Sep meeting  – Responding to each additional trade threat would destabilize monetary policy and create more problems than it solved
– President Trump’s tweet:  – “Massive amounts of money from China and other parts of the world is pouring into the United States for reasons of safety, investment, and interest rates! We are in a very strong position. Companies are also coming to the U.S. in big numbers. A beautiful thing to watch!” 
– White House economic advisor Kudlow:  – US is still planning on Chinese trade team coming to US in Sep  – Trump would like to continue negotiations with China, wants to make ‘right deal’ with China    – Things could change with respect to additional US tariffs on Chinese goods  – Trump open to possible changes on new tariffs if things go well with China talks  – US cannot tolerate depreciation of China’s yuan  – Trump administration not presently considering any other steps regarding China’s currency moves
– White House trade advisor Navarro:  – Calls on Fed to cut interest rates by another three-quarters of a point or full point by end of year to bring US rates into line with rates elsewhere

– RBA left rates unchanged at record low of 1.00%:  – To adjust policy if needed to support sustainable growth  – Will monitor developments in labour markets closely  – Rates to remain low for extended period  – Australian economy expected to grow at 2.5% in 2019  – Main domestic uncertainty continues to be outlook for consumption  – To take longer than expected for inflation to reach 2 pct  – AUD at lowest level of recent times
– BOK meeting minutes:  – Most board members saw a growing diplomatic dispute with Japan as a risk to South Korea’s economic growth but it was not the main driver behind rate cut decision
– HKMA:  – Says on its official Facebook page it denies rumours on lending $400 bln in foreign currency reserve to mainland China
– S&P:  – Risks prevail for emerging markets, despite Fed’s more dovish stance – “Risks loom after the fragile truce between US and China is now tumbling”, as macroeconomic conditions weaken in key EM economies – Macroeconomic conditions remain soft and outlooks have weakened across key emerging-market economies – Expect the Strait of Hormuz to remain open
– Markets:  – US stocks rebounded from worst day of 2019, S&P 500 +1.3%, Dow +1.2%. – US 10-yr Treasury yields went to low of 1.672% before recovering to close 1.716% (-2bp). – Brent crude closed in a bear market, down 21% from Apr’s peak. – USD/CNH touched a high of 7.1397 before paring gains to close lower at 7.0523. – USD/JPY rebounded for the first time in four sessions, closing high at 106.47 from 105.94. – USD/SGD pulled back from session highs of 1.3867 to close lower at 1.3814 from 1.3843.

Posted in AUG