In a market wrap, analysts at Westpac explained that US President Trump launched fresh salvos in the US-China trade war and again criticised the Fed, and the G20 summit highlighted trade tensions – noting that the US dollar fell and US bond yields rose.
Key Quotes:
“Trump’s comments that he was “ready to go to 500″ of tariffs in imports from China; that he was “not thrilled” about the prospects of Fed hikes and that “China, the European Union and others have been manipulating their currencies” saw a volatile close to the week.”
“His comments on the Fed hikes and Trade concerns were the key issue into the weekend’s G-20 finance ministers’ summit. Merkel and EU officials joined China in stating that they would resist and retaliate against US tariffs.”
People’s Bank of China released supplementary guideline changes with respect to wealth management products operated by banks in an effective loosening of current tight controls.
Japanese media suggested that Bank of Japan will debate policy changes and may modify its yield curve targeting, whilst insisting that it would not be tightening but would be to mitigate market distortions.
Bank of England MPC member Tenreyro’s interview in London’s Evening Standard indicated her shift towards voting for a hike, though not explicitly, in August.
Canadian June CPI headlined at 2.5%y/y (exp 2.3%) and the average of core measures lifted to 2.0% (exp. 1.9%).
Fed non-voter Bullard spoke with a dovish tone when he stated that US rates were high by global standards, that Fed forecasts indicate further gradual tightening but that curve inversion may be imminent and would be a bearish signal.
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