Will the anti-China encirclement be formed at the WHO General Assembly? "Highlights on May 18 and the event schedule"

Today, Japan will announce the GDP for January-March quarter.

A recession (two consecutive quarters of negative growth) is being viewed as certain.

In the October-December quarter, despite not being affected by COVID-19, there was negative growth due to the consumption tax hike.

In the January-March quarter, it is expected that negative growth will occur again due to the consumption tax increase plus the impact of COVID-19.

Although still some time ahead, in the April-June quarter, it is thought that conditions may worsen further due to the state of emergency.

Will today’s release fall short of expectations? Or will it exceed them?

How will the government respond to the results?

They said they would raise consumption tax unless a Lehman-like shock occurs, but with a shock exceeding Lehman, why not cut taxes on consumption?

This is something to watch closely.

◎ Today's Points of Attention

1) WHO Annual Assembly

The WHO annual assembly will be held around 7:00 p.m. Japan time today.

The assembly is expected to discuss verification of the spread of COVID-19 and to examine the causes of the outbreak.

Naturally, the confrontation between countries that will hold China responsible and China that wants to avoid responsibility (not admitting it) seems likely to deepen.

Also, toward China-friendly WHO and Director-General Tedros?

Was Taiwan's failure to disclose information linked to the spread of infection?

Will Taiwan be allowed to participate as an observer, given its successful COVID-19 response?

These topics are also expected to be on the agenda.

All topics carry the potential for heightened confrontation with China, so watch closely.

2) U.S.-China Relations

U.S.-China relations have deteriorated since last week.

As noted above, at the WHO annual assembly, a U.S.-China-led containment framework around China may be formed.

Beyond that, the United States is extending sanctions on Huawei and other actions for another year, and strengthening sanctions and criticisms of China regarding Hong Kong and Xinjiang Uygur Autonomous Region’s human rights issues.

China is countering with purchases of agricultural products and tariffs, etc.

China cannot afford to reveal weaknesses this weekend as the National People's Congress is about to begin.

President Trump cannot ease up on attacks for the sake of his poll numbers.

Both sides are in a position where they cannot back down, so anything could happen.

There is a possibility of an abrupt shift toward risk-off, so pay attention to speeches and headlines.

◎ Today's Event Schedule

May 18 (Monday)

WHO Annual Assembly (around 7:00 p.m. Japan time)

Euro-area Finance Ministers meeting

08:00 USD Powell, Fed Chair, speech

08:50 JPY Japan 1-3月期 GDP

19:00 EUR Decos, President of the Spanish central bank, speech

May 19 (Tuesday)

00:00 GBP Tenreyro external member of the Bank of England, speech

03:00 USD Bostic, President of the Atlanta Fed, speech

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