THE DAILY MACRO BRIEF: Powell’s speech, Sino-Italian Cooperation, BoE, ECB and EDF on the agenda....

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07/11/2019 | 02:36 pm
Powell's dovish speech in front of Congress reinforces operators' hopes that the Fed will lower its rates. China and Italy conclude trade agreements. Several senior central bank officials are making speeches today. Brussels is closing the door on further discussions on Brexit. The European economic outlook is once again being lowered.
Powell is mixed. The Fed yesterday expressed concern about the slowdown in economic growth and inflation - still below its target of 2% (1.5% in May). Some questions remain unanswered for the moment, such as developments on the international trade front, the level of the federal debt and the outcome of the Brexit. As a result of this uncertainty, the probability of it acting on its rates from its next meeting on July 31 has increased.

Cooperation between China and Italy. Chinese Finance Minister Liu Kun held a press conference yesterday in Milan as part of the China/Italy financial dialogue. Agreements have been concluded between the two countries in several areas: pharmaceutical, petrochemical, aerospace and agri-food. The Chinese minister expressed confidence in his country's ability to maintain economic growth of between 6% and 6.5% per year. Finally, the trade dispute with the United States was not mentioned, but he added that global growth could suffer from protectionism and that it was important to continue to promote the role of organizations such as the WTO or the G20.

The black gold. Weekly crude oil inventories fell by 9.5 million barrels, against only -1.9 million expected, driving Brent prices up (+3.4% on yesterday).
Source: Bloomberg, 11.07.19

Speeches and reports from the Central Banks on the agenda. Mark Carney, the Governor of the BoE, speaks today in London on the occasion of the biannual publication of the Financial Stability Report. The ECB publishes the minutes of its last monetary policy meeting on June 6. Randal Quarles, Vice President of Supervision of the Fed Governing Council, will give a speech (financial regulation and monetary policy) at an event organized by the Bipartisan Policy Center in Washington DC.

No negotiations possible on Brexit. German Minister Ursula Von Der Leyen, appointed to succeed Jean-Claude Juncker as head of the European Commission, said she had no intention of reopening the Brexit negotiations.

Brussels remains pessimistic. The European Commission has lowered its European growth estimates for 2020 from 1.5% to 1.4%, challenging persistent trade tensions and a possible Brexit without agreement.

Inflation in the US. The US Consumer Price Index, a key measure of inflation, will be published today.

Rebound in growth in the United Kingdom. After a contraction of 0.4% in April, UK GDP grew by 0.3% in May, driven by the industrial sector (+1.4%), and despite the stagnation of the services sector (at +0.3%).

Status quo for Canada. The Central Bank of Canada kept its key interest rate unchanged (at 1.75%) and raised its growth expectations to 1.3% for 2019, from 1.2% in previous estimates.

Romain Fournier
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