Positive departures for the financial markets reassured on Friday by the words of Jerome Powell who ruled out "strong" rate increases. Positive notes also on the tariff front. looms theagreement between the United States and Mexico, which in turn could also precede an agreement with Canada and the signing of NAFTA 2.
BEIJING AT THE HIGHEST FOR 3 WEEKS. SHANGHAI +2.1%
Good news also from China. The central bank set a new parity band between the yuan and the dollar at around 6,80. Beijing thus signals its willingness to avoid a devaluation of its currency above 7 on the greenback. The message is that Beijing does not intend to use the lever of change against Washington. Furthermore, the will not to allow a drop in reserves below 3.000 billion dollars is reaffirmed.
The reaction of the markets was not long in coming:
The yuan rebounded to 6,8110, a two-and-a-half-month high.
The Shanghai Stock Exchange rises by 1,9%, Hong Kong +2,1%. The Korean Kospi is also on positive ground. +0,3%. In Tokyo, the Topix index rises by 0,8%.
Weak oil: Brent at 75,76 dollars a barrel.
THE DRAGON'S MISSION FOR TRIA IS STARTING
The week opens with the official visit of the Minister of Economy and Finance, Giovanni Tria, which will continue until 1 September between Beijing and Shanghai, to "strengthen economic relations between the two countries". That is, to convince China to buy debt securities or participate in investments in the Bel Paese. On the eve of the Minister's return, On Friday 1st September after closed exchanges, Fitch will release the first report card on the Italian debt, (today stable outlook and BBB rating).
FRIDAY THE FIRST TEST FOR THE RATING
In between, from Tuesday to Thursday, the Treasury will face the first auctions after the holidays: it starts on Tuesday with the biennial Ctz, then it will be the turn of the 6-month BOTs and, on Thursday, with the offer of medium-long term securities.
The Mef approaches the tests in less than ideal conditions. In the last two months there has been an outflow of almost 70 billion of Italian securities by international investors, replaced by purchases of our domestic banks (but also of Poste Italiane). The ten-year BTP yield rose to 3,13%. The spread reached 278 basis points.
POWELL PUSHES WALL STREET TO NEW RECORDS
The new highs of the S&P 500 and Nasdaq set on Friday gave the boost to the stocks. The rally continues this morning: Wall Street futures rise by 0,3%. Jerome Powell's speech at the Jackson Hole meeting held no surprises. The Fed chairman does not comply with Donald Trump's warning on the cost of money and reiterated that US rates will rise by a quarter of a point at the meeting on 26 September, while another adjustment remains highly probable (probably at the last meeting of the year).
However, traders are eyeing with concern the flattening of the Treasury yield curve which has flattened further breaking below 20 basis points for the first time since August 2007, even ending up below the Japanese equivalent as it has not happened for eleven years .
The words of Powell, who defended the gradual hikes in rates and who ruled out an overheating of the economy, pushed up the yields on XNUMX-year bonds while those on XNUMX-year bonds remained under pressure in the face of the soft attitude on the inflation by Powell who also referred to Mario Draghi's most famous saying (“whatever it takes”) to demonstrate his determination against the increase in prices.
US GDP DATA ON TUESDAY: +4% EXPECTED
On the macro front, the publication of data on the trade balance on Tuesday stands out during the week, while the US-China clash on tariffs continues. Analysts forecast an increase in the American deficit towards Beijing (69 billion in July against 67,9 billion previously). The second reading of US GDP performance in the second quarter, released on Wednesday, should confirm the excellent state of health of the economy: an increase of 4% is expected (against 4,1% in the first estimate).
SPOTLIGHT ON THE FIAT CHRYSLER AT THE MARKET
On the corporate front:
- The voluntary public tender offer launched by 2i Towers on the shares of EI Towers kicks off today. The operation will end on October 5th.
- The game for Carige heats up even more in anticipation of the assembly on 20 September. On Friday, the former mayor of Genoa, Giuseppe Pericu, also resigned from the board of directors. This is how the majority of the directors in office disappeared.
- In the spotlight Fiat Chrysler, best blue chip last week with a leap of 5%, after the confirmation of Kkr's interest in Magneti Marelli. Morgan Stanley has lowered the target price to 21 euros from 23 euros, however confirming the Overweight opinion: compared to today's quotation, American analysts estimate an upside potential of around +50%
