Weekly Digest - INVESTEC
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This is likely to be a relatively quiet week, with not much in the way of expected macro-economic news. Politics will inevitably not be far from the spotlight, though the focus is likely to be on next week when we have the latest Parliamentary Brexit vote on Tuesday and the Chancellor’s budget on Wednesday.
Investors ended last week with more gains from risk assets, whilst sovereign bonds fell across the board as yields rose again. The main catalyst appeared to be the positive rumours about progress being made in the US-China trade talks. The China’s National People’s Congress officially gets underway tomorrow and runs for more than a week. Economists are expecting some lowering of the official growth forecasts (from the 6.6% recorded for 2018) and for the fiscal deficit target to be edged higher towards 3% of GDP (last year 2.6%). Some reference to progress on trade talks is probably inevitable, and the weekend press in the US carried stories that China had provisionally agreed to buy a large supply of gas from a Texan supplier. There is a potential summit between the two Presidents which could be held before the end of March.
The European Central Bank is due to meet on Thursday, with attention focused on its growth outlook and the potential maturity of its targeted refinancing operations (TLTRO2). The main data highlight this week will be Friday’s release of US payroll data.
Over the weekend, Mr Trump commented that the dollar was too strong “due to a gentleman in the Fed” but this seems to have had a limited effect over the course of the day. Sterling has edged higher against the Euro, with the weekend papers indicating some potential for Parliamentary accord that would avoid a no-deal Brexit.