Handbags at Dawn, Australia Fires-GDP, Fed Back to Zero: Eco Day

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Welcome to Thursday, Asia. Here’s the latest news and analysis from Bloomberg Economics to help you start the day:

• President Donald Trump backed away from the precipice of war with Iran after the Islamic Republic attacked U.S. bases in Iraq with a barrage of missiles the Pentagon believes was intended to cause no casualties. Meantime, an oil price spike from the tensions is unlikely to lessen the vice-like grip that low inflation has on the world economy
• Australia’s economy is likely to be further weighed down by wildfires that have scorched an area larger than the Republic of Ireland and could intensify with more hot, dry weather predicted
• One of the Fed board’s top economists said a U.S. recession could drive both short- and longer-term Treasury yields close to zero, limiting the tools it has to aid the economy
• New data shows Trump may be poised to deliver on one of his biggest economic promises: Reducing the annual U.S. trade deficit with China and the world
• U.S. companies in December added the most jobs in eight months, with business payrolls increasing by 202,000, suggesting the labor market entered 2020 with momentum
• The global economy is likely to pick up slowly this year and next, though the recovery will be more modest than previously estimated despite easing trade tensions, the World Bank says
• ECB chief Christine Lagarde used her first public remarks of 2020 to push for greater coordination between policy makers, arguing a joint fiscal push would help jump-start the economy
• A shortage of workers in Vietnam -- a huge beneficiary of the U.S. trade war with China -- is getting severe enough that some furniture makers are now scouting Cambodia and Bangladesh for factories
• Thailand’s central bank will take further steps to ease restrictions on capital outflows in coming months as it tries to curb gains in the baht, Governor Veerathai Santiprabhob said
• While recession fears aren’t gripping financial markets like they were a few months ago, Canadian households remain worried the nation’s economy is headed for a downturn
• Argentina’s new central bank chief pledged to further cut interest rates to boost a free-falling economy while fighting inflation through a “social pact”
• Little of Amir Yaron’s playbook survived his first year at the helm of the Bank of Israel. Fresh off his post as a professor at Wharton business school, Yaron’s vision for monetary policy centered on measured increases in interest rates

To contact the reporter on this story: Michael Heath in Sydney at mheath1@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Alexandra Veroude

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