Market Recap – Trade Truce

President Trump and President Macron reached a tariffs truce that will stand throughout 2020. Note that Trump is blocking the WTO from reaching a decision against the subsidies that Boeing is receiving from the US government. WTO has already reached its decision on Airbus, on 2019. Marcon was pushing for a digital tax on the revenues that US tech giants generate in Europe. Trump was threatening to impose tariffs on French products, like cheese and champagne. Both agreed to carry negotiations until the end of 2020, before moving forward with any digital tax or tariffs.

The Bank of Japan kept both its targets and its actions unchanged. The size of its monetary easing program (QQE) remained unchanged. BOE continues targeting 2% y/y inflation and 0% 10y government bonds yields. Worth noting the upward revision for the Japanese GDP growth. Currently the BOJ expects 0.9% growth, vs 0.7% on October, pricing in the expected effect of the  recent fiscal stimulus package.

Macro releases:  Other than the official start of World Economic Forum, today’s economic calendar includes the German and European ZEW Economic sentiment. Before translating these numbers, market participants would first need to find an explanation on the today’s aggressive CNY depreciation.


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