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Daily Overview of Global Markets & the SEE Region (Wednesday, 12 June, 2019)
HIGHLIGHTS
WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Investors adopted a cautious stance against risk assets early today amid renewed trade woes with European bourses opening in the red, following modest losses in the majority of Asian equity markets. Fueling worries over a protracted US/China trade war, US President Donald Trump tweeted yesterday that he is “holding up” a trade deal with China and has no interest in moving ahead unless China agrees again on four or five “major points” that he did not however specify. Favored by renewed trade war jitters, USTs gained and German Bunds followed suit with the 2/10-yr yield curve undertaking anew some bull flattening. In FX markets, the EUR/USD was standing close to 1.1335/40 at the time of writing, just short of last week’s three-month high of 1.1347 favored by growing speculation of a Fed rate cut in the not too distant future. In terms of data releases, today’s highlight is US CPI for May, while in the euro area, we expect a lot of ECB speeches, most notably from ECB President Draghi who will deliver the welcome address at the 8th ECB conference on Central, Eastern and South-eastern Europe in Frankfurt (10:15 CET).
GREECE: The Bank of Greece Governor Yiannis Stournaras argued in a speech that the reduction of the primary surplus target from the current 3.5% of GDP by 2022, does not imply a higher public debt ratio but a possibly lower one on the grounds that the increased fiscal space may allow tax and social security contributions reductions which, if coupled with reforms and privatisations, may in turn lead to higher GDP growth. Meanwhile, the Greek 10-year benchmark yield ended yesterday’s session at a new all-time low of 2.787%. On the economic data front, according to the Bank of Greece, in Q1 2019 nominal apartment prices are estimated to have increased on average by 4.0%YoY.
SOUTH EASTERN EUROPE
CESEE MACRO & MARKET DEVELOPMENTS: While most emerging markets assets concluded yesterday’s session on positive ground, at the time of writing their performance is mixed as investors are assessing US President Donald Trump’s comments that he is holding up a deal with China and he will not back down unless China agrees to make concessions that were already accepted at prior stages of negotiations. Particularly, Asian emerging markets are currently under some additional pressure as Chinese inflation data for May released earlier today revealed substantial inflationary pressures that have resulted in prices increase from 1.5% YoY in February to a 15-month high of 2.7% YoY in May.
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