Rabobank analysts suggest that with the fresh escalation of the US-China trade tensions on the minds of investors, it’s likely that the market will remain on the back foot unless we’re seeing some signs of trade rapprochement.
Key Quotes
“No formal talks are scheduled for this week, but any updates will probably first be out on Twitter anyway. We’ll have to take it when it comes.”
“There are rate decisions in India, New Zealand, Thailand, the Philippines and Australia. In all but the latter, rate cuts are strongly considered. In Australia the RBA is expected to keep the policy rate at 1.00% on Tuesday, following back-to-back rate cuts in June and July. But the next cut to a new record-low of 0.75% is only a matter of time, we believe. There are lots of Fed speakers on this week’s calendar as well, which may set the FOMC up for the second insurance interest cut as soon as September. Investors have fully priced in this move since last Friday’s tariff threat, and the Chinese response will not see this expectation being reversed any time soon.”
“The week ends with UK GDP, and even though the consensus is for stagnation, there’s a clear risk of a negative q/q growth rate in Q2 due to the combination of slower global economic growth, political uncertainty and the unwinding of earlier Brexit stockpiling activity. Brexit developments making U.K. GDP growth more volatile than usual, and we may see the issue becoming a theme again in the third quarter ahead of the October 31 deadline.”
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