National People's Congress Closing, Establishment of Hong Kong National Security Law and US Reactions!? "Points of Interest on May 28 and Event Schedule"
Yesterday the Dow averaged rose by more than 500 points again, extending a risk-on rally to more than 1,000 points over two days.
Today, with the National People's Congress closing, risk-off conditions are in focus.
Additionally, yesterday a €750 billion joint bond was proposed as part of corona stimulus measures, causing the euro to surge.
As there is opposition to the joint bond, the euro’s rise did not last long.
The pound weakened as UK-EU trade talks stalled and a no-deal Brexit loomed.
◎ Today’s Points of Focus
1) Closure of the National People’s Congress
The National People’s Congress held in China is coming to a close.
With its closing, the Hong Kong National Security Law is set to be passed and established.
In Hong Kong, protests are ongoing against the Hong Kong National Security Law, and a further hardening is expected today. Also, many countries have condemned the law, and the U.S. is considering sanctions.
Notable sanctions being watched include continuation of Hong Kong’s preferential measures (visa issuance and tariffs) and asset freezes for Chinese officials in the United States.
If Hong Kong’s preferential treatment is removed, it would be a major issue not only for companies based in Hong Kong but also for Asian companies seeking tariff-related advantages.
With attention on the enactment of the Hong Kong National Security Law and U.S. sanctions, investors will focus on Hong Kong and Chinese stock prices.
2) U.S. GDP (revised) release
The U.S. GDP for Q1 2020 (advance) contracted at an annualized rate of 4.8%, but the advance figure is based on estimates from partial data.
In particular, March data, when the coronavirus impact started, is mostly estimates.
The GDP revision released today will replace the estimated portions with actual figures and recalculate.
How accurately the impact of the coronavirus could be estimated will affect whether the revised figure deviates from the initial estimate, so caution is advised.
3) Key Speeches
Today, speeches from RBA, BOE, and FRB officials are scheduled, with focus on negative interest rates and YCC (Yield Curve Control).
The Fed has ruled out negative rates, while the BOE has shown more positive language toward negative rates; market watchers will be listening for any statements regarding their introduction.
◎ Today’s Economic Calendar
May 28 (Thursday)
National People’s Congress closed; Hong Kong National Security Law enacted
09:00 AUDRA Bank of Australia Governor Lowe speaks
16:00 EUR Spain HICP (Consumer Price Index)
16:30 EUR Bank of France Governor Lagarde speaks
18:00 EUR Euro-area Consumer Confidence
19:00 GBPThorndike BOE external member speaks
21:00 EUR Germany HICP
21:30 USDU.S. GDP (Q1) / Durable Goods New Orders / Initial Jobless Claims
23:00 USD U.S. Existing Home Sales (Pending)
May 29 (Friday)
00:00 USDCrude Oil Inventories
00:00 USDWilliam, President of the Federal Reserve Bank of New York, speaks
04:00 USD Harker, President of the Philadelphia Fed, speaks
08:30 JPY Japan April unemployment rate
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