Recap: Brexit grabs the headless (again)
- The US and China trade war took a positive turn with a Chinese announcement that trade talks would restart in October.
- The UK Government had in late August effectively announced the closure of Parliament early (proroguing Parliament), which had allowed limited time for Members of Parliament (MPs) to block the UK leaving the EU on 31st October without a deal.
- MPs last week did though defeat the Government on three occasions, taking control of the Parliamentary agenda to allow for the passing of a bill that forces the UK Government to ask for a Brexit negotiation extension into January 2020, plus rejecting the Government’s request for a general election in October. This leave a no deal Brexit far less likely now at the end of October.
- The third significant geopolitical development last week was in Hong Kong, as the extradition bill that had started the pro-democracy demonstrations, was withdrawn.
- These three positive events saw global stock markets rally higher, whilst safe haven assets like bonds sold off.
- In the forex space, the Pound allied against both the US Dollar and Euro (GBPUSD higher, EURGBP lower). In addition, the previous US Dollar strength (as a safe haven) was reversed last week as the greenback weakened against many currencies. Except versus the Japanese Yen, which was even weaker, as the ultimate safe haven currency lost ground as global financial markets moved back towards a risk on theme.
- On the macroeconomic data front, early September has seen Asia and European economic measures worsen, whilst in the US the ISM Manufacturing Index came in below expectations with the Non-Manufacturing Index beating expectations. The US Employment report ended last week and was also mixed, though the Non-Farm Payroll data was marginally below consensus (yet the broad market response was subdued).
- A big focus this week will be on Thursday’s European Central Bank Meeting, with a potentially far more dovish tone anticipated by the markets.
Key this week
|Date||Key Macroeconomic Events|
|09/09/19||China trade data; UK GDP; UK Industrial & Manufacturing Production|
|10/09/19||China Consumer Price Index (CPI); UK Employment data|
|11/09/19||US Producer Price Index (PPI)|
|12/09/19||EU Industrial Production; German CPI; ECB monetary policy meeting; US CPI|
|13/09/19||US Retails Sales; Michigan Consumer Sentiment Index|