Trade tops EM bill with growth outlook in balance

By BLOOMBERG

DUBAI • There are few if any stories in emerging markets (EMs) big enough this week to eclipse the US-China trade meetings in Beijing.

Even US Federal Reserve chairman Jerome Powell’s speech last Thursday in Washington, given added significance following last week’s knock-out payrolls report, will play second fiddle to the negotiations.

The formal talks yesterday and today, the first since Presidents Donald Trump and Xi Jinping agreed a 90-day tariff-truce in Argentina last month, are likely to determine whether markets can sustain the rally that drove a gauge of EM currencies to the highest level since August last Friday.

Other risks lurk everywhere, from Apple Inc’s revenue warning to the recent slew of disappointing Asian economic data. And China’s decision to cut the reserve-requirement rate merely underlined the urgency with which policymakers are seeking to arrest the economic slowdown.

New Beginnings
As Venezuela President Nicolas Maduro starts his second term on Thursday, there’s speculation the Trump administration will unveil new sanctions or label the nation a state sponsor of terrorism. That comes as the country braces for legal challenges from bondholders after defaulting on debt.

Traders will be keeping an eye on interest-rate decisions in Romania and Poland, though policymakers are forecast to keep borrowing costs unchanged. Comments from Romania’s central bank about the nation’s new taxes could move markets.

Data Flurry
Chinese consumer and producer price indexes for December are due on Thursday, and could show further evidence of weakening demand.

Tame inflation, however, would give the world’s second-largest economy room for further monetary easing.

Tomorrow, Mexico is expected to report that inflation accelerated last month, boosting the case for a prolonged period of higher interest rates.

Central bank chief Alejandro Diaz de Leon is set to speak on Thursday at an annual economic outlook event.

Taiwan was due to release December trade figures yesterday. The island is releasing its Consumer Production Index (CPI) data today.

Czech’s CPI data on Thursday may give clues about the outlook for the nation’s monetary policy, with the koruna exchange rate also a key factor.

Turkey’s current-account balance will narrow in November 2018 to a US$900 million (RM3.69 billion) surplus, economists forecast data due on Friday to show. That’s down from a record US$2.8 billion surplus in October.

In South Africa, manufacturing Purchasing Managers’ Index for December 2018 was to be released yesterday.

The gauge has been below the 50 level since March, suggesting the economy is struggling to gain momentum after a first-half recession.

Business confidence and manufacturing- production data comes on Thursday.