5 November 2018
Bassanese Bites: Trade hopes – Week beginning: 05 November 2018
Global stocks and bond yields staged a rebound last week, reflecting strong US economic data and hopes that US and China could be edging closer to a trade deal. US 10-year bond yields and the $US appear close to breaking recent end-week highs.
The US economy is humming: with solid consumer, employment and manufacturing reports last week. The ongoing US earnings reporting season also remained good, though a nervous market was quick to sell down companies (like Apple) which warned of a softer outlook. A notable development was a further slump in oil prices, helped by reports of a strong production lift in the US and Saudi Arabia, along with the Trump’s decision to allow some countries (like Japan, India and South Korea) more time to wean themselves off Iranian supplies. China meanwhile has simply ignored US requests, and continues to import oil from Iran. That said, the drop in oil could prove a temporary reprieve given dwindling global spare capacity, solid ongoing demand and America’s apparent resolve to eventually curtail Iranian supply.
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