Contrasted launch of the Stock Exchanges, awaiting the decisions of the Fed and other central banks. China loses momentum, down 0,3%. On parity the Hang Seng of Hong Kong. The Central Economic Work Conference will be held tomorrow and will be closed by President Xi Jing Ping in person. It will be an opportunity to announce the measures to counter the sharp decline in the economy (GDP growth slowing down to 5,4%, industrial production at its lowest point in three years, consumption at its weakest level in 5 years): many companies , claims a New York Times report, have imposed mandatory (and unpaid) holidays on employees.
SALE TOKYO, AGREEMENT WITH THE EU
Conversely, the equity markets of South Korea (+0,3%) and India (+0,7%) rose. The Tokyo Stock Exchange also rose (+0,6%) on the eve of the signing of the trade agreement between Japan and the European Union set for Wednesday and of the last meeting of 2018 of the Bank of Japan, which should not adjust the cost of money .
But the market's attention is already focused on the Fed. After the ECB summit which sanctioned the end of Quantitative Easing, it will be up to Fed chairman Jay Powell to announce the choices of the Bank's monetary committee on Wednesday evening, at the end of the meeting "more major player of the year” according to the Financial Times. In addition to announcing the already planned increase of a quarter of a point in interest rates (from 2,25 to 2,5%) the banker will in fact have to provide indications on the strategies he intends to follow next year, the indicator most awaited by the whole world, today in great embarrassment.
WORLD STOCK EXCHANGES AT THE LOWEST SINCE JUNE 2017
The prospect of the increase in the cost of money, associated with the anticipations of an imminent slowdown in the economic cycle, pushed world stock markets downwards in this second part of 2018. The MSCI World index closed down by 1,5 % Friday's session (-1% per week): with this drop, the global benchmark fell to its lowest level since July 2017, -8,7% since the beginning of the year.
For the first time since March 2016, the three main indices of the US stock market are in the correction zone (ie 10% below their highs). There was not a single new issuance of high yield bonds in November, the likes of which hasn't happened since November 2008.
The 2,89-year Treasury Note, the benchmark US government bond, is at XNUMX%, a level of yield that anticipates a drastic change in monetary policy by the central bank.
WHITE SMOKE IN ROME ON THE MANEUVER
The euro moved little at 1,131 against the dollar, in the low end of the 1,130-1,140 range, within which it has been moving for about a month and a half.
Among the topics of the day there is undoubtedly the process of the Italian Maneuver pending the examination in Brussels. In the summit which was held tonight the funds to cover the 2,04% deficit would have been found thanks to money "identified in the folds of the budget". In other words, the resources available for the measures dearest to the majority (100 quota and basic income) drop by 4 billion: thus the reduction in pressure on government bonds could continue: in the last month, the 3,62-year yield fell from 2,94 at XNUMX%.
STERLING RECOVERS BEFORE THE BUOY
Sterling recovered to 1,2580 against the dollar, above the lows (1,2477) reached on Wednesday. The meeting of the Bank of England will be held during the week: the slowdown in the economic situation (the growth rate will probably be reduced to 0,3% for the fourth quarter) and in the labor market could suggest a downward adjustment in the cost of money, but the bitter conflict over Brexit (at home, even more than with Brussels) will probably advise Mark Carney not to move.
OIL UNCHANGED, CO2 CERTIFICATES SPREAD
The picture is completed by the publication of the minutes of the Bank of India meeting, the last chaired by Urjit Patel before his resignation due to disagreements with Prime Minister Modi, who imposed a more accommodating line and the rebound of the Mexican peso: the budget presented by the new left-wing government has turned out to be far less "generous" than the markets feared.
Brent oil is unchanged at $60,4 a barrel. The leap in CO2 certificates should be noted: the 2019 expiry contract rose by 15% last week, +3% on Friday, the closing day of the Katowice climate conference.
Among the macro data of the week, the Italian trade and payments balance and the consumer price index of the Eurozone. The Eurozone Confidence Index will be released on Friday.
ADVANCE DIVIDEND FOR STM, COUPON FOR STABLE ASSETS
On the corporate front, the quarterly coupon of Stm (0,06 dollars) and the interim dividend of Beni Stabili (0,021369 euro) are being paid this morning.
The accounts of Oracle and Fedex arrive in the USA. Scheduled the Empire Manufacturing Index and the Nahb Housing Market Index.
