THE DAILY MACRO BRIEF: US-China make progress, as surprising data emerges…
This wild optimism is surprising, as the current growth cycle has been stretching more and more since it started after the 2008 subprime crisis. While the Sino-American trade negotiations seem to be moving in the right direction, we must nevertheless remain cautious because the news is sometimes unpredictable. Most countries doubt their growth and in response, the Peruvian central bank lowered its key rates and the Malaysian central bank decided to lower its reserve requirement ratio.
The United States and China "agree" to reduce tariffs. If the two countries manage to sign the "Phase one" agreement, they should simultaneously cancel the customs duties they have imposed on each other in recent months, in the same proportions. No location has yet been found for the signing of the agreement. Chinese negotiators are seeking from the United States the cancellation of the 15% tax (as of September 1) on $125 billion of products imported from China, as well as the cancellation of the 25% customs duties that have been imposed on $250 billion of other products.
Peru's central reserve bank surprises. The institution decided to lower its key interest rate from 2.50% to 2.25%. This decline was relatively unexpected. According to a Bloomberg survey, 10 out of 16 economists expected a 2.50% retention rate. This new rate is the lowest since 2010 and a decrease has been implemented for the second time in four months. The central bank even seems inclined to make a further reduction if necessary, in order to avoid at best suffering the effects of the slowdown in its growth.
Decrease in the reserve requirement ratio in Malaysia. The State Bank of Malaysia has decided to reduce its reserve requirement from 3.5% to 3%. This decrease will theoretically provide the necessary liquidity in the interbank market.
Today's economic highlights
The University of Michigan Confidence Index will be the main U.S. indicator for the day. In China this morning, foreign trade indicators are above expectations.