ASIA:
The US-China trade deal has been split up in two phases. Phase 1 is expected to be passed soon and entails pushing back the December 15th tariffs on Chinese goods. Phase 1 will introduce China to promises to protect US intellectual property rights, as well as increased purchases of US agricultural products between 40-50 billion USD worth. US President Trump said that he is unlikely to sign a deal before he meets with Chinese President Xi Jinping at the APEC forum held in Chile. China has also expressed that they want another round of talks before they sign the Phase 1 of the deal. In other news, Washington today said that it will soon require Chinese officials in the US to notify the State Department ahead of any contacts they plan to have with American educators, researchers, and local and state governments. China also stated that they will have reciprocal measures in China.
US lawmakers passed several bills aimed at helping the rights of Hong Kong Protestors. China took offense to these actions and threatened to retaliate with “strong countermeasures.”
Singapore PM Lee Hsien Loong said yesterday that there is not an “easy” way forward for Hong Kong and that “wisdom and restraint” needs to be exercised by China to make the one country, “two systems,” work. He was critical of the protestors, saying their goal was to bring down the government. “The demonstrators say they have five major demands and not one can be compromised but those are not demands which are meant to be a programme to solve Hong Kong’s problems. Those are demands which are intended to humiliate and bring down the government,” the PM stated.
India’s economy is slowing, with the latest demand figures for fuel at the lowest point in over two years. Consumption of petroleum products dropped in September to 16.01 million tonnes, which was the lowest since July 2017.
The major Asian stock markets had a mixed day today:
The major Asian currency markets had a mixed day today:
Precious Metals:
Some economic news from last night:
China:
Japan:
South Korea:
Australia:
New Zealand:
Some economic news from today:
Indonesia:
EUROPE/EMEA:
German Chancellor Angela Merkel has said that the negotiations are in the final “sprint” and has “belief” that an agreement will be reached with the UK. French President Macron also expressed the same thoughts. “It’s our hope and will to be able to endorse an agreement, and I hope that agreement will be found in the coming hours,” he said. A deal is expected to be reached tomorrow at the EU summit where UK PM Boris Johnson can meet with EU leaders. However, for this to happen UK PM Boris Johnson has a final hurdle to pass which is getting the backing of the new deal from the Democratic Unionist Party in Northern Ireland. Lead Negotiator Michel Barnier said that there is an issue of the VAT system that must be finalized.
Germany has announced that it will not block Chinese firm Huawei from its 5G mobile networks. This is somewhat a blow to US-German relations as the US called for an outright ban on the Chinese manufacturer. The US also declared it would not share intel with countries that plan to adopt the Chinese equipment over fears that information would be sent back to Chinese intelligence firms. Australia and New Zealand have previously bent to US pressure to ban Huawei products.
US President Trump told media that the battle in northeast Syria was not the US’ border and that the battle is just about land. He went on to say that the Kurdish forces are “no angels.”
A senior Iranian MP has told the media that they will scale back on commitments on the nuclear deal by reducing access of international inspectors to its nuclear sites. “When the other party doesn’t fulfil its commitments, there is no necessity for us to meet our part of commitments,” he said.
The major Europe stock markets had a mixed day today:
The major Europe currency markets had a green day today:
Some economic news from Europe today:
UK:
Italy:
Germany:
France:
Eurozone:
US/AMERICAS:
Chicago Federal Reserve President Charles Evans, a voting member of the FOMC, does not see a need for further rate cuts this year. Evans agreed with the two prior rate cuts but noted “there is a limit to what monetary policy alone can accomplish.” In regards to stagnant inflation, Evans believes that current policy is on track to push inflation higher but acknowledged the economy may have “difficulty navigating all the uncertainties out there or that unexpected downside shocks might hit.” The FOMC is set to discuss future rate policies during the October 29-30 meeting.
Vice President Mike Pence and Secretary of State Mike Pompeo announced on Wednesday that they will meet with Turkish President Recep Tayyip Erdogan to discuss the war in Syria. Pompeo stressed the importance of meeting face to face with Erdogan to push for a ceasefire. However, President Erdogan stated earlier in the week that he would never agree to a ceasefire and would only discuss matters with President Trump directly. President Trump commented on the matter today, reinforcing his decision to pull US troops out of Syria. “We are not a policing agent. It is time for us to go home,” he announced. Trump reiterated that he wants to see an end to the Turkish invasion of Syria, and is hopeful hard sanctions will destabilize Turkey into retreating.
Tuesday night’s Democratic debate heated up as the 12 candidates faced off in Ohio. Elizabeth Warren received the most speaking time, but lost credibility after failing to address how she would pay for her “Medicare for All” plan. Self-proclaimed Socialist Bernie Sanders admitted that taxes would rise under such a plan. Joe Biden publicly defended his son Hunter, claiming no wrongdoing, and presented moderate plans in comparison to his rivals who presented ideas ranging from banning guns to implementing new taxes. Notably absent were any questions pertaining to China. The only topic all candidates agree on — impeach President Trump.
Bernie Sanders received support from three of the Democratic freshman “squad” members: Ocasio-Cortez, Omar, and Tlaib. Pressley, the fourth unofficial member, has yet to voice support for a candidate. Many believe that this support will garner more young voters to support Sanders.
Apple is planning to make India one of its key global production hubs as part of a China de-risking plan. This will include assembly of the latest flagship iPhones in sync with worldwide release. The ramp-up of India manufacturing will allow Apple to have an alternative base to avoid US imposed Chinese tariffs as the majority of Apple’s production occurs in China. The company just started commercial production of the iPhone-XR locally at the Foxconn facility near Chennai, Tamil Nadu, India, after undertaking trials for several weeks to move up the manufacturing value chain in India. Following this, Apple plans to start making the latest iPhone 11 series. Apple will export the devices to other markets after testing the waters with the exports of iPhone 6s and 7 models to Europe. Apple is not planning to reduce prices on any of its locally made iPhones despite saving 20% in import duties through local manufacturing.
US Market Closings:
Canada Market Closings:
Brazil Market Closing:
ENERGY:
According to oilprice.com, India has been purchasing Venezuelan oil and getting around the US sanctions as they are in fact bartering gasoline for Venezuelan crude. Recent optimism regarding Phase 1 of the US-China trade deal is propping up crude oils. EIA report showed that the US is expected to produce close to 9 million barrels per day in November, which will be a record.
The oil markets had a mixed day today:
The above data was collected around 16:20 EST on Wednesday.
BONDS:
Japan -0.20%(+0bp), US 2’s 1.59% (-4bps), US 10’s 1.75%(-2bps), US 30’s 2.23%(-0bps), Bunds -0.42% (+3bp), France -0.27% (+3bp), Italy 1.03% (+1bp), Turkey 15.39% (+102bp), Greece 1.44% (-33bp), Portugal 0.21% (+2bp), Spain 0.26% (+2bp) and UK Gilts 0.71% (+1bp).
