Will the risk-on continue?! "Key points and event schedule for May 27"

Due to risk-on advancing yesterday, the dollar and yen weakened, and resource currencies were bought.

Equities in various countries rose, crude oil prices increased, and safe-haven gold prices fell, a typical risk-on market.

Whether risk-on is driven by recovery expectations from COVID-19 or risk-off from China-related tensions, the market appears to be swinging.

◎ Today's Event Schedule

1) Risk-On

Risk-on advanced yesterday, and today whether risk-on will continue is in focus.

Yesterday, the risk-on market arose from expectations for COVID-19 vaccine development and economic reopening due to deregulation, with the Nikkei stock average briefly rising more than 580 yen to recover to the 21,000 level, and the Dow Jones average briefly reaching 25,000 dollars.

The VIX index, known as the fear index, dipped below the key level of 30, and the market began to regain calm.

Attention is on whether the recent rise will be adjusted or continue to rise.

2) National People’s Congress (China)

The NPC is scheduled to run until tomorrow the 28th, and China is steadily pushing forward with the passage of laws such as the Hong Kong National Security Law, drawing increased pushback from Europe and the U.S.

Yesterday, EU President von der Leyen urged China to exercise restraint regarding the Hong Kong National Security Law, and Prime Minister Abe, who participated in a video conference with von der Leyen, expressed the same view.

The UK, Taiwan, Canada, and Austria also issued a joint statement, strengthening China containment.

The United States is considering sanctions on the Hong Kong National Security Law, including asset freezes in the U.S. and revocation of preferential treatments for Hong Kong.

Today, attention remains on how far the China containment will progress and how China will respond to various countries.

3) ECB Easing Policy

There is growing expectation for additional easing as comments suggesting loosening conditions for the ECB's PEPP (Pandemic Emergency Purchase Programme) easing policy emerged.

However, the coalition proposal for the COVID-19 recovery fund by Germany and France faced opposition from the Netherlands, Austria, Denmark, and Sweden in a joint document.

Following the recent constitutional court ruling in Germany deeming it unconstitutional, reports have surfaced that the ECB is drafting an emergency plan to conduct QE without the Bundesbank, rekindling the possibility of a clash between Germany and the ECB.

There is increasing focus on whether the ECB can reach a consensus.

◎ Today's Event Schedule

Wednesday, May 27

16:30　EURSpeech by Christine Lagarde, ECB President

17:00　EUR　ECB Financial Stability Report

17:30　EUR　Beatriz (de Guindos) ECB Vice-President

20:00　MXN　Mexico Unemployment Rate

Thursday, May 28

01:30　USD　Bernard (Charles) - Saint Louis Fed President James Bullard Speech

03:00　USD　Beige Book

04:00　USD　Speech by Bostic, President of the Atlanta Fed

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