U.S. Treasury repayment and interest payments, weekend focus due to the 50-day factor! ~ February 15 highlights and schedule ~

Yesterday, a quite weak U.S. retail sales figure triggered dollar selling. The USD/JPY, which had briefly reached the mid-111 range, fell to the mid-110s. Also, with a key vote approaching in the British Parliament, the pound was being pressured. As a result, since the pound had already been sold beforehand, there was no notable movement in the pound even if Prime Minister May's withdrawal agreement was rejected in Parliament.

◎ Today’s Points of Focus

1) U.S. National Emergency Declaration and Budget

President Trump declared a national emergency over the budget for border wall construction. However, it is anticipated that there will be pressure from Congress opposing it. Nevertheless, for Trump, the border wall, a campaign promise, is being carried out. With him appearing satisfied, he signed the budget. The temporary budget that passed today, which had been the deadline, will prevent a government shutdown.

Can this be interpreted as risk-on? Or will the conflict between Trump and Congress, Democrats versus Republicans, intensify? Is the risk-off reaction due to growing confrontation a concern?

2) U.S.-China Trade Talks

Today, cabinet-level talks between the U.S. and China on trade are held. At present, there is little expectation of notable progress. If an agreement cannot be reached, additional tariffs worth $250 billion will be imposed from March 1. Some reports mentioned a possible 60-day extension, but it was only under consideration, and sources could not be verified. Therefore, expectations should be modest.

If no agreement is reached today or over the weekend, risk-off; if an agreement is reached, risk-on. If the decision comes after the New York close, there could be a window open next week. I would like to conduct proper position adjustments over the weekend.

3) Fifty-Day and U.S. Treasury Maturities and Interest Payments

Today is the 15th, the fifty-day. Also, it is a day of U.S. Treasuries maturities and interest payments. Normally, foreign investors would sell dollars if they convert maturing and interest-bearing dollars into their home currencies.

4) British Parliament and Withdrawal Negotiations

In the British Parliament, Prime Minister May’s withdrawal plan was rejected in the vote. In today’s parliamentary votes, several motions were made, but no withdrawal plan materialized. The next vote is on February 26. When May’s withdrawal plan was rejected, the pound did not fall significantly. Attention will be on Europe’s reaction. From Europe’s side, it seems that May and the British Parliament cannot unite domestic opinions, and it feels unclear what they want to achieve. The future progression of EU-UK relations and withdrawal negotiations is of keen interest.

5) European Economy and Politics

Europe is concerned about a recession. Yesterday, Germany’s GDP narrowly did not enter a second consecutive quarter of decline (recession). However, concerns about European economic downturn remain. Spain’s HICP is also to be released today.

On the political front, with Spain’s budget rejected, there are talks that a dissolution election could be announced today. Today I will keep an eye on Spain.

◎ Today’s Economic Event Schedule

February 15 (Friday)

U.S.-China cabinet-level trade talks

U.S. provisional budget deadline

U.S. Treasury maturities and interest payments

10:30 CNY China CPI (Consumer Price Index)

17:00 EUR Spain HICP (Consumer Price Index)

18:30 GBP Retail Sales

19:00 EUR EU Trade Balance

22:00 EUR Kudlow ECB Council Member remarks

22:30 USD Retail Sales

23:55 USD Boss t ic Atlanta Fed President Speech

February 16 (Saturday)

00:00 USD University of Michigan Consumer Confidence Index

03:00 USD Baker Hughes Rig Count