Five Things You Need to Know to Start Your Day
Five Things You Need to Know to Start Your Day
(Bloomberg) --
Warning signs for China’s economy, better news for the euro area, and Morgan Stanley ousts FX traders. Here are some of the things people in markets are talking about today.
Warning
Signs are mounting that China’s financial stress could soon test policy makers in the world’s second largest economy. With early indicators showing growth slowing for a seventh month in a row, increasing risks in the banking system may only add to the dilemma. This week’s unprecedented debt restructuring at a state-owned company points to authorities being wary of moral hazard from bailouts. All of which is probably adding to the country’s apparent unwillingness to react with more than vague threats to President Donald Trump signing the Hong Kong bill.
Better
While China’s economy seems to be at risk, there are signs that the worst may be over for the euro area. German unemployment unexpectedly dropped in November as a slump in manufacturing started to show signs of stabilizing. This morning’s flash inflation estimate showed a pick-up to 1%, ahead of expectations, but still far below the ECB’s target. Investors are taking notice of the less-than-awful outlook with U.S. purchases of ETFs focused on European assets hitting the highest level in almost two years in November.
Mismarking
Morgan Stanley fired or placed on leave at least four currency traders in New York and London over an alleged mismarking of securities that concealed losses of between $100 million and $140 million, according to people with knowledge of the matter. The bank’s probe includes an investigation into currency options. Morgan Stanley’s FX desk has struggled this year, with the lender’s third quarter results showing that a strong performance in fixed income was “partially offset by a decline in foreign exchange.”
Markets slip
With no developments in trade talks and a quiet session expected when U.S. markets reopen after the Thanksgiving break, stocks are drifting lower. Overnight, the MSCI Asia Pacific Index dropped 0.9%, while Hong Kong’s Hang Seng Index had a surprise 2% tumble. In Europe, the Stoxx 600 Index was 0.1% lower at 5:50 a.m. Eastern Time, well off early session lows. S&P 500 futures pointed to a small drop at the open, the 10-year Treasury yield was at 1.759% and gold was flat.
Enough is enough
Prince Abdulaziz bin Salman will likely use his first OPEC meeting as Saudi energy minister next week to signal the kingdom will no longer compensate for other members’ non-compliance with the OPEC+ production agreement. Russia, Iraq, Kazakhstan and Nigeria have all exceeded their agreed limits this year. There was some good news for Saudi Arabia on the Aramco IPO front, with the retail tranche more than fully covered ahead of the deadline. A barrel of West Texas Intermediate for January delivery was trading at $58.08, keeping the commodity headed for a fourth week of gains.
What we've been reading
This is what's caught our eye over the last 24 hours.
- Trump makes surprise visit to Afghanistan.
- U.S. to negotiate carbon trades under Paris climate agreement.
- Currency traders near end of a dismal decade.
- How Belgium became Europe’s den of spies and a gateway for China.
- The world doesn’t have enough pigs to fill China’s pork deficit.
- It’s Black Friday.
- A fifth fundamental force could really exist. We just haven’t found it yet.
To contact the editor responsible for this story: Yakob Peterseil at ypeterseil@bloomberg.net, Cecile Gutscher
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