Tuesday , November 12 2024
Home / Perspectives Pictet / Weekly View – May awaits her Valentine

Weekly View – May awaits her Valentine

Summary:
The CIO office's view of the week aheadLast week’s State of the Union speech revealed little news, but President Trump’s conciliatory tone toward bipartisan deal making was apparent, particularly around infrastructure spending and drug prices. In contrast, he remained firm in his stance on China, although with an economic (i.e. trade), rather than geopolitical emphasis. While there is some uncertainty on the future of a US-China trade agreement, especially in the wake of Trump’s cancelled meeting with Xi Jinping during his trip to Asia later this month, we still believe a temporary deal is possible, although it may come after the 1 March deadline. Key to watch this week is the Friday deadline for federal budget negotiations. Failure to find an agreement would mean a second US government

Topics:
Cesar Perez Ruiz considers the following as important: , , , , ,

This could be interesting, too:

Cesar Perez Ruiz writes Weekly View – Big Splits

Cesar Perez Ruiz writes Weekly View – Central Bank Halloween

Cesar Perez Ruiz writes Weekly View – Widening bottlenecks

Cesar Perez Ruiz writes Weekly View – Debt ceiling deadline postponed

The CIO office's view of the week ahead

Last week’s State of the Union speech revealed little news, but President Trump’s conciliatory tone toward bipartisan deal making was apparent, particularly around infrastructure spending and drug prices. In contrast, he remained firm in his stance on China, although with an economic (i.e. trade), rather than geopolitical emphasis. While there is some uncertainty on the future of a US-China trade agreement, especially in the wake of Trump’s cancelled meeting with Xi Jinping during his trip to Asia later this month, we still believe a temporary deal is possible, although it may come after the 1 March deadline. Key to watch this week is the Friday deadline for federal budget negotiations. Failure to find an agreement would mean a second US government shutdown.  

European economic data printed weaker than expected as uncertainty around the Chinese economy and Brexit impacted major exporters like Germany, in particular. With Prime Minister Theresa May returning to the UK parliament on 14 February for a second vote on her Brexit deal, clarity on the outcome remains conspicuously absent as she continues to haggle with Brussels over the contentious backstop to prevent a hard border between the Republic of Ireland (EU) and Northern Ireland (UK) after Brexit. At the same time, the prime minister is working on securing support from Labour members of parliament, particularly from those who fear a ‘no deal’ Brexit. We still expect some kind of a deal to be ultimately agreed, albeit possibly with a short-term extension to the current 29 March withdrawal deadline.

Meanwhile, markets have sent conflicting messages so far this year. Last week, the US Treasury yield curve flattened while yields came off as bond prices rose. Meanwhile, equities – especially in the US – have rebounded in 2019 from their December lows. These simultaneous recoveries are due to low growth and inflation expectations in bond markets and slightly better earnings than anticipated by equities markets. In order for equities to maintain their upward momentum over bonds this year, we will need to see stabilisation in the Chinese and European economies in the months ahead.

Do not hesitate to contact Pictet for an investment proposal. Please contact Zurich Office or the Geneva Office

Leave a Reply

Your email address will not be published. Required fields are marked *