Morning Report – Thursday 18th June

Main Headlines

Donald Trump asked Xi Jinping to help him win re-election by buying lots of U.S. farm products, John Bolton’s new tell all book alleges. The president was “pleading with Xi to ensure he’d win,” the New York Times quoted from the book. The ex-national security adviser says the impeachment probe should’ve investigated Trump not just for pressuring Ukraine over Joe Biden but also for other times he tried to utilise law enforcement for political gain. The Trump administration sought to block the book.

Trump signed a measure punishing Chinese officials for imprisoning more than one million Muslims. The law, which won widespread support in Congress, requires the president to sanction anyone found responsible for oppression. Bolton alleges in his book Trump earlier praised the camps to Xi, the Wall Street Journal reported.

U.S. and European stock futures drifted lower, while Asian equities were sold as investors weighed rising coronavirus cases in America and China and the impact on Bolton’s tell-all book on the elections. JD.com bucked losses in Hong Kong to gain on its debut. Treasuries and the yen climbed. Gold was steady and Oil fell for a second day.

OPEC+ ministers meet today to assess the state of world markets and implementation of output curbs. Trafigura said compliance is improving with supply cuts by Iraq, while demand is back to about 90% of the pre-pandemic level. The recovery in China is even better, with demand restored to levels preceding the outbreak.

GBP

The BOE is expected to expand its asset purchase programme by boosting bond purchases by a further 100 billion pounds. The key rate will be held at 0.1%. The market will be following closely for any tweaks to the lending program or potential yield curve control. The British pound traded in a narrow range before today’s meeting.

EUR

Ursula von der Leyen signalled the EU may be willing to compromise on its demands over fishing and the role of its courts in any post-Brexit trade deal. “No one questions the U.K.’s sovereignty on its own waters,” the EC president said. “We ask for predictability and guarantees for our fishermen and women, who have been sailing in those waters for decades.” Michel Barnier warned lawmakers of the possibility a deal won’t be struck.

USD

The dollar edged higher this morning as growing concerns about a rise in coronavirus cases underpinned safe-haven. A surge in new infections in several U.S. states and the imposition of travel curbs in Beijing to stop a separate outbreak have served as a reminder that the pandemic could be a severe drag on the global economy for a protracted period.

CHF

The SNB is one of the only central banks which hasn’t touched rates through the crisis but instead sold the franc at the fastest pace in years. The bank will stick to that strategy, though there is a risk of it possibly being labelled a currency manipulator by the U.S.

Main Economic Data/Central Banks/Government (All Times BST)

8:30 a.m.: SNB rate decision
9:00 a.m.: Norway rate decision
9:00 a.m.: ECB publishes economic bulletin
9:00 a.m.: Italy, Spain April trade balance
9:45 a.m.: Spain sells bonds
12:00 p.m.: BOE rate decision
1:30 p.m.: U.S. initial jobless claims
2:00 p.m.: BOE’s Broadbent, Tenreyro speak