Asia-Pacific: The Week Ahead (Mar 4-8), China Engages U.S. In Trade Talks & Corporate Bonds

By Steven Levine, Senior Market Analyst, Interactive Brokers

Activity on China’s economic calendar will be somewhat light in the week ahead, however investors will glean some important updates on the country’s services sector, trade balance figures, as well as consumer and producer prices.

Meanwhile, Chinese energy business developer Chongqing Energy Investment Group is due to sell new U.S. dollar-denominated bonds for general corporate and refinancing purposes.

Market participants’ attention in the Asia-Pacific region has been generally diverted recently to a slew of geopolitical concerns, especially as tensions have reignited between nuclear-emboldened countries India and Pakistan, and as the leaders of the U.S. and North Korea meet in Vietnam.

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Marc Chandler, the chief market strategist at Bannockburn Global Forex, noted that the “euphoric response to the extension of the tariff-freeze between the U.S. and China” had not been sustained.

U.S. President Donald Trump reportedly said Sunday he will delay increasing tariffs on US$200bn worth of Chinese imported goods, amid progress in the trade talks between the two countries. The hike in those tariffs – to 25% from 10% -- was due to take effect March 1.

Chandler said that the market rally that followed Monday was “exaggerated,” with the CSI 300, having gone from a 6% gain to a 1.2% loss the next day. He added that the “dramatic rise spooked officials.”

Contributing to U.S. Dollar Corporate Debt Volumes

Meanwhile, some Chinese companies are taking advantage of the ultra-low interest rate landscape to sell new U.S. dollar-denominated corporate debt deals, notably, while the Federal Reserve appears to have shifted gears to a more dovish stance on monetary policy.

Fed chair Jerome Powell Tuesday reinforced the Federal Open Market Committee’s (FOMC) decision in January to take a ‘patient’ approach with regard to future policy changes when testifying before the U.S. Senate’s Committee on Banking, Housing, and Urban Affairs.

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Disclosure: The author does not hold any positions in the financial instruments referenced in the materials provided.

The analysis in this material is provided for information only and is not ...

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