· Dollar heads for weekly gain as pandemic recovery stalls
The yen rose and the dollar was headed for its best week of the month on Friday, as surging coronavirus cases and stalled progress toward U.S. stimulus had investors seeking safe assets.
As fresh curbs to combat COVID-19 were introduced in Europe and Britain, the world's reserve currency surged to a two-week high of 93.910 against a basket of currencies =USD. It held just below that peak in the Asia session.
The safe-haven yen JPY= crept back toward a two-week high it hit on Wednesday and last traded at 105.24 per dollar.
“Markets fear a slowdown in activity as new virus cases rise,” ANZ bank analysts Susan Kilsby and David Croy said in a note.
“The deterioration is evident everywhere across Europe, which is a major blow to the recovery’s momentum and reinforces deflationary risks.”
· U.S. Treasury yields move lower as traders monitor stimulus talks
U.S. government debt prices were higher on Friday morning as traders monitored U.S. stimulus talks.
At around 2:40 a.m. ET, the yield on the benchmark 10-year Treasury note fell above 60 basis points to trade at 0.7290%. At the same time, the yield on the 30-year Treasury bond also dropped about 20 basis points to trade at 1.5054%. Yields move inversely to prices. Higher yields suggest higher risk but also higher returns for investors.
Traders are monitoring discussions over further fiscal stimulus in the U.S. The IMF’s Managing Director Kristalina Georgieva told CNBC on Thursday that she has “no doubt” the U.S. will implement a new economic stimulus package.
· Spending dropped, savings dwindled for U.S. unemployed after enhanced benefits expired: study
· Investors throw money at everything, dump cash - BofA
Global investors yanked almost $26 billion out of cash funds over the last week and piled $17.6 billion into bonds, another $8.6 billion into stock markets, and the third highest amount on record into mortgage backed securities.
“(The) recent blue wave bullish consensus reflects liquidity addiction, new ‘buy-the-rip’ not ‘buy-the-dip’ mentality, rather than future policy,” Bank of America said in a research note, referring to rising chances of a clean sweep by Democrats in the upcoming U.S. elections.
· U.S. reportedly explores sanctions on China’s Ant Group. Analysts say they’ll be ‘largely symbolic’
A potential U.S. blacklisting of Ant Group, a Chinese financial technology giant, is unlikely to have a big impact on its business, experts told CNBC, given that the firm’s focus is on its domestic market.
Washington is trying to get Ant Group, which is 33% owned by Alibaba and controlled by billionaire Jack Ma, onto the U.S. “Entity List”, a blacklist which restricts American companies from doing business with individuals or firms listed. That’s according to a Reuters report, citing people familiar with the matter.
The Entity List requires American companies to get a license before exporting certain products to blacklisted firms.
Ant Group is currently preparing for a blockbuster concurrent initial public offering (IPO) in Shanghai and Hong Kong, so the threat of blacklisting comes at a very sensitive time.
But experts said that blacklisting Ant Group won’t have a huge impact on its actual business or the upcoming debut.
“But, the blacklist is effective in another respect: making other countries cautious about linking their tech ecosystems to China.”
· China is open to taking on more debt if that’s what it takes to support the economy
As China recovers from the coronavirus pandemic, the country’s central bank is more open to increasing loans to an already debt-heavy system than it is to cutting back.
The People’s Bank of China on Wednesday disclosed data for the first three quarters of the year that showed steady loan growth.
Total social financing, a broad measure of credit and liquidity in the economy, rose by nearly 3.5 trillion yuan ($522 billion) in September to a total of 280.07 trillion yuan. That was a 13.5% increase from a year ago — faster than the 12.8% pace recorded at the end of the second quarter, and 2.8 percentage points above the same period last year.
Covid-19 hit China early this year just as the country was in the early years of attempting to cut its reliance on debt for growth. Total Chinese debt across household, government, financial and non-financial corporate sectors rose from over 300% of GDP to nearly 318% in the first quarter, according to estimates published in July by the Institute of International Finance. The trade group expected that ratio to reach 335% of GDP in the following months.
The pace of credit growth remains low relative to that during the global financial crisis in 2007-2008.
Overall, Chinese authorities have been trying to make it easier for privately run, smaller businesses to get loans in a system that tends to favor larger, state-owned enterprises.
· Australia says it’s ready totalk to China about their trade dispute
· EU imposes tariffs on aluminium products from China
The European Union will impose duties of up to 48% on imports of aluminium extrusions from China midway through an investigation into whether Chinese producers are selling at unfairly low prices.
The EU official journal said on Tuesday that the duties, ranging from 30.4 to 48.0%, would apply from Wednesday. The duties are provisional, meaning they will apply until the investigation’s expected completion by April.
At that point, the bloc could apply duties for five years.
· European new car sales rise by 1.1% year-on-year in September: ACEA
European car registrations rose slightly in September, the first increase this year, industry data showed on Friday, suggesting a recovery in the auto sector in some European markets where coronavirus infections were lower.
In September, new car registrations rose by 1.1% year-on-year to 1.3 million vehicles in the European Union, Britain and the European Free Trade Association (EFTA) countries, statistics from the European Automobile Manufacturers’ Association (ACEA) showed.
· UK's Raab says: we're disappointed by EU but a deal can be done
Britain is disappointed by the European Union’s demand that London give more concessions to secure a trade deal but a deal is close and can be done, British Foreign Secretary Dominic Raab said on Friday.
· Brexit drama: PM Johnson to answer EU's demand to give ground
Prime Minister Boris Johnson will on Friday give Britain’s response to the European Union’s demand that he either gives more concessions to secure a trade deal or braces for a disorderly Brexit in three months.
· France's Le Maire backs tariffs on U.S. goods in aircraft dispute
French Finance Minister Bruno Le Maire said on Friday he was in favour of Europe imposing tariffs on U.S. goods after the World Trade Organization (WTO) granted the European Union the right to retaliate against U.S. subsidies for planemaker Boeing BA.N.
· Singapore exports rise 5.9% year-on-year in September, slower than forecasts
Singapore’s September non-oil domestic exports (NODX) rose 5.9% from a year earlier, driven mainly by electronics shipments, official data showed on Friday, but were slower than forecasts.
That compared with a 7.7% increase in August, and lower than the 10.8% rise forecast by economists in a Reuters poll.
Exports of electronics jumped 21.4% from a low base a year ago.
· With eye on China, Japan's Suga seeks tighter ties with Vietnam, Indonesia
Japan’s new leader will aim to beef up security ties when he visits Vietnam and Indonesia next week amid concerns about Beijing’s growing assertiveness, but he is likely to steer clear of the harsh anti-China rhetoric used by U.S. counterparts.
· Japan needs another extra budget to help ailing economy: Reuters poll
Japan’s government needs to compile a third extra budget for the current fiscal year ending March to shore up an economy hammered by the COVID-19 pandemic, economists said in a Reuters poll.
Nearly three quarters of economists polled said the government should spend up to 10 trillion yen ($94.95 billion) under the extra budget to help the world’s third-largest economy recover after record contraction in the second quarter.
· Britain moves closer to COVID-19 vaccine trials that infect volunteers
“Human challenge” trials of potential COVID-19 vaccines, where volunteers are deliberately infected with the disease, could become a reality after a British biotech firm signed a contract with the government to create and provide strains of the virus.
· What a pause means in a Covid-19 clinical trial
Covid-19 clinical trials from Johnson & Johnson and Eli Lilly hit a snag after safety monitors halted them over bad reactions from participants.
But pauses to clinical trials are not uncommon, and the delays should reassure the public that the systems in place intended to protect volunteers are working, medical experts told CNBC.
The data and safety monitoring board, an independent group of experts who oversee U.S. clinical trials to ensure the safety of participants, recommends a pause to a clinical trial any time there is an “adverse event.” The pause will take as long as needed to gather all information and does not necessarily mean there is a problem with the vaccine or treatment, said Isaac Bogoch, an infectious disease specialist who is a member of the DSMB.
· China's economic recovery seen broadening in third-quarter as consumers re-emerge: Reuters poll
China’s economic recovery likely stepped up in the third quarter as consumers returned to shopping malls and major trading partners reopened for business, shaking off the record slump seen earlier this year.
The world’s second-largest economy is expected to have grown 5.2% in July-September from a year earlier, faster than the second quarter’s 3.2%, according to a Reuters poll.
· Oil slides on COVID-19 resurgence, strong dollar
Oil prices slid on Friday, dragged down by concerns that a spike in COVID-19 cases in Europe and the United States is curtailing demand in two of the world’s biggest fuel consuming regions, while a stronger U.S. dollar also added to pressure.
Brent crude futures for December LCOc1 dropped 38 cents, or 0.9%, to $42.78 a barrel by 0708 GMT, while U.S. West Texas Intermediate (WTI) crude futures for November delivery CLc1 slid 35 cents, or 0.9%, to $40.61 a barrel.
Both benchmarks fell slightly during the previous day, but they remain nearly unchanged from a week earlier.
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