The Week Ahead – Trade Worries, Yields, Italy
Volatility will continue to be a focus this week for the markets, as trade worries, turmoil on the political front in Italy, U.S. yields and key data could all to play a role.
Stocks and the JPY saw strong move last week as the trade dispute intensified, China dropped its fix rate to low’s not seen in a long time, this led President Trump to call China currency manipulator. China advised state buyers to stop buying U.S. agricultural products. This led to the US30 losing well over 1000 points at one stage in the week before pulling back most of the weeks loses late in the week.
This coming week traders will remain focused on U.S. – China trade developments, yields, the 10 – year dropped below1.7% during last week which added to sharp selling in equities. This week’s CPI should be viewed closely due to the current worries around the 10- year holding above 1.7%. Italy has returned to centre stage with renewed worries regarding the countries stability. Italy’s coalition government imploded on Thursday, as deputy prime minister and leader of Italy’s ruling League party, Matteo Salvini, declared the arrangement unworkable and called for fresh general elections, this sent Italian shares tumbling, the FTSEMIB lost 2.5% on Friday. Italian banks led the losses, Blanco BPM plunging 9%. Analysts are now saying that the top three EU economies could be in recession.
Key data to come this week;
Tuesday U.S. CPI Core CPI – Wednesday UK CPI – Thursday Australian Employment Change, Unemployment. UK Retail Sales. U.S. Retail Sales.