China pumps the markets
By Vincent-Frédéric Mivelaz
Chinese officials confirmed further monetary easing to support economic growth, including tax stimuli and credits – and this pleased investors. The announcement comes after constructive trade talks between the US and China, and the Chinese central bank’s announcement to cut banks’ reserve requirements by 1%. Will the bank ease its policy rate this year? This remains to be seen, as official numbers on Chinese growth in 2019 will be published during the National People’s Congress in early March. Equities are set for a green day: although Chinese exports fell 4.4% in annual terms, news of the government interventions boosted markets.
Will hard Brexit break the pound?
By Vincent-Frédéric Mivelaz
Tonight will see the UK House of Commons vote on Prime Minister Theresa May’s proposed Withdrawal Agreement at about 7 pm London time. We expect a refusal. If May is rebuffed enough, we could see vote of no confidence against the government or May’s resignation. However, we suspect a tighter outcome, which probably will lead to an extension the Brexit deadline to mid- or late-2019. GBP/USD is currently trading at 1.2857, approaching 1.2710 short-term.