apart from a few statistics, the first day of the week was not very eventful, influential in the financial markets. The rest of the week, however, could prove to be more lively, with many of the risks identifiable information, and several key events.
The point on the most important events to watch for over the next few days of trading of the week :
Trump has announced new rates unexpected on Mexico Friday, and prices on $ 200 billion of chinese imports increased from 10% to 25% this Saturday confirmément to the decisions taken in early May. While tensions in the war in the business world show no signs of abating, investors fear that the global economy is heading into a recession.
The bond markets throw a warning with us yields to three months, well above the rate in 10 years, while the inversion of the yield curve had predicted most of the us recessions of the 20th century. May was the first month in the red this year for global equities and the trade war may have dealt a blow to the reluctance of the Federal Reserve to react to tensions in global trade. The financial markets currently provide rate reductions of the Fed’s two percentage points by the end of the year.
The Fed officials are organizing a two-day conference in Chicago this week to discuss the way in which they define the monetary policy, but the emphasis will be placed on the best way to fulfill its mandate to stabilize inflation and ensure full employment may be overshadowed by the short-term requirements of the fight against the impact of the trade war.
Friday will see the publication of the report on non-farm employment in the United States for may, after a series of recent economic data contrasting. According to forecasts, the economy is expected to create 183 000 jobs and the unemployment rate will hold at 3.6%.
Among the other important data on the economic calendar include the ISM manufacturing index, orders for factories, on Tuesday, the Beige Book of the Fed, the employment report non-farm ADP (PA:ADP) on Wednesday and a report on the trade balance on Thursday.
The president of the European Central Bank, Mario Draghi, will give a boost to the economy of the euro zone on Thursday, in the form of loans generous to the banks, in order that they maintain their activities, while leaving the door wide open to a stimulus even more exciting.
The outlook for the euro zone economy has darkened. The war, global trade shows no sign of dissipation, Italy is again in conflict with the European Commission, the German industry continues to show dark figures, the stock markets are falling, inflation expectations are falling and the threat of “Brexit” on is great.
The growth recorded in the first quarter, however, was significantly above expectations, and bank lending has continued to increase, which indicates that any revision to the economic forecasts of the ECB is expected to remain modest.
“We believe that the governing council will probably have a tone more dovish than its projections could justify,” said Morgan Stanley (NYSE:MS). “This is partly because the risks of degradation, rather than economic, are of a political nature, ranging from trade policy to domestic policy and geopolitics. “
Trump said that the United Kingdom should refuse to pay his or her bill of divorce from 39 billion pounds to the European Union and “get away” from negotiations on the Brexit if Brussels does not give the Uk what it wants, in an interview with the Sunday Times ahead of his State visit to Britain which started today.
Trump will be hosted by queen Elizabeth II and will also be meeting with the first outgoing minister, Theresa May. Mass protests are planned in the United Kingdom during his visit.
Trump reiterated his support to the candidates of the succession of May, who declared that the United Kingdom had to go on the scheduled date of the 31 October, with or without an agreement.
Australia is expected to become the second largest advanced economy to start to reduce its interest rates this week. The Reserve Bank of Australia should lower the rate a quarter-percentage point to reach a record low of 1.25% after its meeting on Tuesday, which would be its first decline in the last three years.
“We would be very surprised that the RBA did not start the process of easing at the meeting on 4 June. The markets are certainly ready for this, with Bloomberg showing an implicit probability of market for lower rates to 87.2% at this meeting,” said ING (AS:INGA).
“By August, the markets imply a probability of further decline of more than 50%. We are in agreement. By then, the RBA will have received more data on inflation, as well as additional information on the labor market. “
At the same time, the Reserve Bank of India is also expected to lower its interest rates at its meeting Thursday, thereby reducing the redemption rates to 5.75%, to 6%.