The Chinese delegation that will sign the so-called "phase 1" trade agreement with the United States should arrive in Washington today, with a view to signing, on Wednesday, the text that was painfully delivered at the end of 2019. Nothing seems likely to derail the process, especially as the US administration has again let go last night by removing China from its list of countries that manipulate their currency. This decision follows "binding commitments to refrain from competitive devaluation" of the yuan.
On Wall Street, this atmosphere has continued to drag the indices higher, with symbolic headlines such as the 3,300 points on the S&P500 and the 29,000 points on the Dow Jones. The Nasdaq 100 has already erased the 9,000 point cap this week. There seems to be a big difference between stock prices and the reality for some companies. For example, Boeing has had the worst year of its existence in 2019, but its stock barely moved. How long will the markets go up?
Meanwhile, new data shows that Germany recorded a record budget surplus in 2019, in a context of economic slowdown. The surplus stands at 13.5 billion euros, buoyed by higher than expected tax revenues and lower interest expenditure. The previous high point was EUR 12.1 billion in 2015. Tomorrow, the results for the entire public sector (cities, social security and states) will be published.
A rate cut from the Bank of England seem possible. MPC members Michael Saunders and Jonathan Haskel are still calling (since November) for a rate cut. They will need three more decision-makers to join them in order to get a majority (there are 9 members in the monetary committee of the British central bank). This seems possible as long as Silvana Tenreyro and Gertjan Vlieghe are not opposed, due to the uncertainty surrounding future trade agreements or weak global growth. In this scenario, Mark Carney could tip the balance for what would be his last monetary decision.
Today on the agenda, there is only one major indicator. The U.S. December inflation is expected at 0.2% by consensus. Earlier today, China's December foreign trade appeared more dynamic than expected.