US markets are closed to mark Independence Day but in the background, the drumbeat of global trade wars continues to rumble, undermining the yuan and Chinese equities, sparking fears of contagion across fixed income and dragging a major tech company onto the battlefield.
The Peoples Bank of China's intervention yesterday in support of its currency did slow down the yuan's decline but the market remains unnerved by the currency's prospects. "The signal is rather clear that the PBoC doesn't want to see a devaluation just yet," notes John J Hardy, Saxo's Head of FX Strategy.
On the trade war front we have fresh news out of the EU that the bloc is trying to put together a coalition countries to counter president's Trump's threat of tariffs on motorcar imports to the US, and this, Hardy says, illustrates the vulnerability of the EU to Trump's trade crusade.
In equities, "we're still in a risk-off scenario even though Chinese equities are 1% lower" says Peter Garnry, Saxo's Head of Equity Strategy.
To hear more about what's moving in global markets today, please click on the above link and listen in to our Saxo experts' morning call.
Outrageous Predictions 2023: The War Economy
- The constantly growing global need for energy drives the world's richest to huddle up and launch a R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb.
French President Macron resignsThe political stalemate in France and the rise of Marie Le Pen following the 2022 elections corners President Macron, forcing him to give up on politics and resign from his position. At least for now.
Gold rockets to USD 3,000 as central banks fail on inflation mandateAs markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
EU Army forces EU down path to full unionWith continued challenges in the region and a US military that isn't aggressively enacting its former role as global policeman, the European Union agrees to create its own armed forces, bringing the whole region closer.
A country agrees to ban all meat production by 2030In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
UK holds UnBrexit referendumFollowing a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Widespread price controls are introduced to cap official inflationHistory tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve assetSanctions against Russia have caused widespread turmoil due to US Dollar moves in countries across the globe that don't consider the US an ally. To relieve themselves from this, they leave the IMF and create a new reserve asset.
USDJPY fixed to the USD at 200 as Japan overhauls financial systemFollowing the challenges that faced the Japanese Yen in 2022, the Bank of Japan attempts to keep the currency from sliding. Unsuccessful on the long-term, Japan will launch a reset of its entire financial system.
Tax haven ban kills private equityWith the war economy comes an increased focus on national interests and sovereign nations' ability to assert themselves. In that regard, the OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.