Is the complete removal of US-China tariffs just a rumor!? ~ Highlights and schedule for January 18 ~

In the early morning, headlines suggested a potential removal of tariffs against China, causing stock prices to surge. The 10-year Treasury yield is also rising. The USD/JPY pair rose, reaching around 109.40 at one point. Additionally, the pound rose as there were many positive signals regarding the Brexit withdrawal agreement’s alternatives, a second referendum, and the EU’s response.

◎ Today’s Highlights

1) Brexit-Related and the May Administration

Details are gradually emerging about the alternative to the withdrawal plan that was rejected recently. An alternative was submitted on the 21st, and after deliberations, a revote is planned for the 29th. Also, a bill to consider a second referendum was submitted on the 21st. Details of the new withdrawal proposals are slowly being clarified. Depending on the content, they may be received positively, and the pound has risen significantly.

Also, reports indicate ministers in the May administration are preparing to resign. The withdrawal decision and the no-confidence vote both resulted in what could be called historic defeats for the May administration. Consequently, there is a possibility that another no-confidence vote could be submitted. The pound moves sharply on headlines, so caution is needed.

2) U.S. Corporate Earnings and U.S.-China Relations

U.S. corporate earnings are being released one after another. It seems that many companies are feeling the impact of the U.S.-China trade war. Amid this, rumors of the U.S.-China tariff removal caused the market to react positively. Later, reports denying the rumors emerged, but the market remained positive. Today, market attention is on whether additional reports will appear and how news regarding U.S.-China relations will influence market sentiment.

3) Mexico Border Wall and Budget Plan

President Trump remains unwavering about building the border wall with Mexico, which puts him at odds with the Democrats, and the budget talks have reached a standstill. The government shutdown is prolonging and starting to affect various sectors. The focus is on how long the shutdown will continue and whether a state of emergency will be declared. Please also see below.

About Government Shutdowns and Their Impacts

◎ Today’s Event Schedule

Friday, January 18

G20 Finance Ministers and Central Bank Governors Meeting

18:00 EUR Visco, Governor of the Bank of Italy

18:00 USD IEA Monthly Report

18:30 GBP Retail Sales

22:30 CADCPI (Consumer Price Index)

23:05 USDWilliams, President of the Federal Reserve Bank of New York, Speech

Saturday, January 19

Germany’s CDU/CSU party elects new leader

00:00 USD University of Michigan Consumer Confidence

01:00 USD Hawks, President of the Philadelphia Federal Reserve Speech

03:00 USD Baker Hughes Rig Count