PBoC steps in with trade war stimulus

PBoC steps in with trade war stimulus

Michael McKenna
Head of Editorial Content, Saxo Bank

The People's Bank of China came out with a surprise round of economic stimulus late Tuesday, lending $31 billion to financial institutions via its medium-term lending facility. According to Saxo bank fixed income specialist Althea Spinozzi, the Chinese central bank said that it will back the Chinese economy via whatever tools it deems necessary as the Sino-US trade war deepens with new tariff threats from President Trump.

Saxo Bank Head of Equity Strategy Peter Garnry reports that the cash injection saw equities rise in the mainland with the benchmark Shanghai Composite gaining 0.27% after days of losses.

"Emerging market stocks remain only 5% north of an official bear market and we expect the pain to continue as the US Federal Reserve continues along its path of policy normalisation," says Garnry.

Saxo Head of FX Strategy John Hardy is watching US yields where the recent dip does not appear to have held; Hardy is keeping an eye on the Swiss franc and Japanese yen as potential beneficiaries of a renewed rise in US yields.

USDCHF
Source: Saxo Bank

In the commodities space, oil remains in contention ahead of the Opec summit in Vienna. According to Saxo commodities head Ole Hansen, Iran remains staunchly opposed to any rise in production while Russia seeks an increase of 1.5 million barrels/day.

"We see production rising by 300-600,000 b/d irrespective of Iran's wishes," says Hansen.

In the agricultural space, Hansen tells us that the grains sector looks set to stabilise after a four-day decline on trade war fears. Soybeans, he adds, have proven one of the incipient conflict's biggest casualties as half of US farmers' production goes to China.

In single stocks, Garnry says that Oracle's latest earnings release showed an EPS miss while Starbucks's fell short on revenue. On the data front, today sees the UK holding a key vote on Brexit that could see Parliament gaining a bigger say in the proceedings should a 'hard' or 'disorderly' Brexit scenario emerge.

Quarterly Outlook

01 /

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

Content disclaimer

None of the information provided on this website constitutes an offer, solicitation, or endorsement to buy or sell any financial instrument, nor is it financial, investment, or trading advice. Saxo Bank A/S and its entities within the Saxo Bank Group provide execution-only services, with all trades and investments based on self-directed decisions. Analysis, research, and educational content is for informational purposes only and should not be considered advice nor a recommendation.

Saxo’s content may reflect the personal views of the author, which are subject to change without notice. Mentions of specific financial products are for illustrative purposes only and may serve to clarify financial literacy topics. Content classified as investment research is marketing material and does not meet legal requirements for independent research.

Before making any investment decisions, you should assess your own financial situation, needs, and objectives, and consider seeking independent professional advice. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

Please refer to our full disclaimer and notification on non-independent investment research for more details.

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

All trading and investing comes with risk, including but not limited to the potential to lose your entire invested amount.

Information on our international website (as selected from the globe drop-down) can be accessed worldwide and relates to Saxo Bank A/S as the parent company of the Saxo Bank Group. Any mention of the Saxo Bank Group refers to the overall organisation, including subsidiaries and branches under Saxo Bank A/S. Client agreements are made with the relevant Saxo entity based on your country of residence and are governed by the applicable laws of that entity's jurisdiction.

Apple and the Apple logo are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.