The Brexit Case Review Begins, Markets Roar! ~ Focus Points and Schedule for December 5 ~
◎ Today's Highlights
1) Brexit Proposal – Day 2 of Deliberations
Since yesterday, Parliament in the United Kingdom is examining the Brexit proposal agreed between the UK and the EU. The pound has been volatile yesterday due to the deliberations, parliamentary votes, and remarks from key figures. Today is the second day of deliberations. The exact content of the discussions is not known, but UK parliamentary sessions are scheduled from 9:00 to 17:00 (Japan time 18:00 to 02:00). However, remarks from important figures may appear around the start and end times. Be cautious of pound fluctuations.
The pound's fate could hinge on this week!! An emergency video has been made.
2) Stock Prices and Interest Rates
Attention from the market is on US interest rates. In particular, the spread between long- and short-term rates is notable. Currently, the yield spread between the 2-year and 10-year Treasuries has narrowed considerably and has reached the same level. The yield spread between the 2-year and 5-year has inverted. Flattening or inversion of the yield curve is often cited as a signal of a recession. Moreover, the US long/short rate differential has a strong correlation with USD/JPY. Yesterday, the dollar-yen pair, which had been stuck, fell sharply. The Dow Jones Industrial Average posted a record decline of 800 points. The Nikkei futures also posted a record drop of 1,000 yen. Today, attention is likely to remain on stocks and rates.
3) Italy Budget Deadline
The excessive fiscal deficit correction procedure (EDP) deadline for the Italian government approaches. Yesterday's remarks.
Italian Prime Minister Giuseppe Conte
“I plan to submit a budget proposal to the European Commission within a few hours.”
European Commissioner for Economic and Monetary Affairs Paolo Gentiloni
“We are waiting for a concrete and credible revised budget proposal from the Italian government.”
Italian Finance Minister Roberto Gualtieri
“Regarding the budget, we are seeking a solution with the European Commission.”
There have been remarks regarding the budget. Depending on the content, this could lead to euro buying. Today, too, focus on statements related to the budget.
4) Memorial Day for Former President George H.W. Bush
Today, the U.S. stock and bond markets are closed for the memorial service for former President George H.W. Bush. Also, Powell’s congressional testimony has been canceled. U.S. indicators have been postponed. With the pound likely to be volatile in the UK deliberations, and the U.S. market closed, thin trading could lead to even more volatile price movements. Caution for sudden moves.
◎ Today's Event Schedule
Wednesday, December 5
EDP deadline for Italy’s excessive fiscal deficit correction
U.S. stock and bond markets closed
09:30 AUD Australia GDP
10:30 JPY Vice Chair Kabuto of the Bank of Japan speaks
10:45 CNY Caixin Services PMI
16:30 SEK Service PMI
17:30 EUR Draghi, ECB President speaks
17:45 EUR Italy Composite & Services PMI
17:50 EUR France Composite & Services PMI
17:55 EUR Germany Composite & Services PMI
18:00 EUR Eurozone Composite & Services PMI
18:30 GBP Service PMI
18:30 JPY BoJ Governor Kuroda speaks
19:00 EUR Eurozone Retail Sales
Thursday, December 6
OPEC meeting
00:00 CADBOC Policy Rate Decision and Statement
04:00 USD Beige Book (Beige Book—Federal Reserve District Summaries)
09:30 AUD Retail Sales & Trade Balance
◎ Weekly Schedule
