China is pushing to make the yuan a bigger player in global finance once again. The Reserve Bank of India has a plea for Fed policy makers. And America’s `maximum pressure’ campaign on North Korea continues, for now. Here are some of the things people in markets are talking about.
Yuan’s Global Push Back On
After more than two years on the back-burner, there are signs that China is once again focusing on its efforts to increase the yuan’s status in global finance. Since May, initiatives from the central bank and government have included starting full operation of a new phase of an international payment system, making it easier for overseas lenders to borrow the yuan to help facilitate foreign investments in onshore bonds and stocks, and signaling the resumption of a program for mainland investors to buy offshore assets with the yuan that’s been on ice since 2015. The yuan grabbed a record 2.8 percent slice of global payments three years ago, before a crackdown on outflows in the wake of the 2015 devaluation saw that figure shrink to 1.7 percent as of April. These days -- with China’s foreign reserves rising and volatility staying low -- officials have a window to refocus on President Xi Jinping’s quest for a bigger Chinese role in global finance.
RBI to Fed: Slow Down!
India’s central bank governor has a request for the U.S. Federal Reserve: slow the pace at which you plan to shrink your balance sheet to help emerging economies overcome the recent market turmoil. Urjit Patel wrote in the Financial Times that the upheaval in emerging markets is threatening global growth and stems from two events – the Fed’s long-awaited moves to trim its balance sheet and a substantial increase in U.S. Treasury issuance to pay for tax cuts and increased spending. India’s monetary policy committee is set to release a rate decision on June 6. Swap markets are pricing in a hike, and any move to hold rates could hurt the high-yield rupee, which has lost nearly 5 percent this year already as foreign investors dumped Indian bonds and stocks.
America to Keep `Maximum Pressure’ on Kim
The U.S. campaign to economically isolate North Korea will continue, the White House press secretary said Monday, even as preparations advance for President Donald Trump’s summit next week with Kim Jong Un. The White House set a time for Trump’s first meeting with Kim: 9 a.m. Singapore time on June 12, Press Secretary Sarah Huckabee Sanders said. But she said there has been no change in what Trump has described as a “maximum pressure” campaign on the North Korean regime. Trump said last week he’d avoid using the phrase because of improving relations between the two countries. “Our policy hasn’t changed, and as the president stated, we have sanctions on, they’re very powerful and we would not take those sanctions off unless North Korea denuclearized,” Sanders said on Monday.
OPEC Holding Production Steady
OPEC is holding oil production steady even as it debates an increase. The Organization of Petroleum Exporting Countries pumped 31.9 million barrels a day last month, unchanged from revised levels for April, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data. April’s output was the lowest in a year. The cartel and its allies are discussing whether to revive output after supply curbs they agreed to in late 2016 succeeded in clearing a global oil glut. Saudi Arabia and Russia, the biggest two producers in the accord, have signaled that more oil will flow later this year to make up for potential declines in Iran and Venezuela. Still, they will have to convince others in a 24-nation alliance, some of whom prefer the higher prices. Oil declined in New York Monday, dipping below $65 a barrel for the first time in almost two months.
Tech Powers Nasdaq to Record High
U.S. stocks reached the highest since mid-March, tracking peers in Europe and Asia as optimism over the world’s largest economy helped investors put protectionist fears aside. Treasuries fell, pushing yields up for a fourth consecutive trading session. The S&P 500 strengthened for a second day. Microsoft Corp. agreed to buy coding site GitHub for $7.5 billion, helping to push the Nasdaq Composite Index to a record high for the first time since March. Coming up, the RBA meets. While officials are expected to yet again hold rates at 1.5%, there may be developments in the board’s outlook after recent market turmoil. Aussie net exports are also due, followed by GDP figures on Wednesday. In China, Caixin PMI is on tap, as are PMI figures out of Hong Kong and Singapore.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- President Trump asserts that he has the “absolute right” to pardon himself.
- Deutsche Bank recommends buying Chinese stocks even in light of trade tensions.
- China lessor CALC is in talks to order as many as 200 planes from Boeing and Airbus.
- Nintendo investors are looking for answers after the worst two-day drop in 18 months.
- Kirin and Sapporo are marketing get-drunk-quick beverages.
- These are the fast-food guilty pleasures of some top chefs.
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