10Y abe banks euro FX krona larry kudlow riksbank

The Dragon, The Riks, And The Wardrobe

Well, here's hoping the "dragon energy" is with you on Thursday.

Well, here’s hoping the “dragon energy” is with you on Thursday. So far, it’s seemingly quiet, but speaking of “dragons,” it’s notable that China is reportedly considering slashing import duties on cars to between 10% and 15% from the current 25%.

That, a week after pledging to open up the auto industry as part of a general push to placate Trump even as Beijing has been keen to simultaneously demonstrate its capacity to retaliate against what China views as “bullying” by the U.S.

Any reduction in the auto tariffs would obviously benefit brands like Mercedes, BMW, Porsche, and Lexus.


Meanwhile, Trump is all set to send the “dream team” of Larry Kudlow, Lighthizer and Navarro to China to “negotiate” – so they’ll be accompanying Mnuchin on the mission and I’m not sure that’s a good thing.

Mainland shares were sharply lower on the session:


Also overnight, the Riksbank tweaked their rate path a bit – the first hike is now set for the end of this year, as opposed to the more open-ended H2 2018 guidance previously. Here’s the new “Rikshog“:

That dovish tilt put pressure on the krona, which fell to an eight-year low against the euro:


Here’s Goldman:

Today’s announcements were more dovish than our expectations. The Riksbank showed greater concern for near-term spot core inflation, and did not revise inflation up over the medium term, as we had expected, owing to the recent FX weakness and falls in the unemployment rate. The Riksbank showed concern over weak inflation and said that “if inflation is to remain close to the target going forward, continued support is needed from monetary policy “. With today’s announcement, we now expect a hike in Q4 (December or possibly October), a change from our previous forecast of a September hike

Oil continued to move higher after shaking off bearish inventory data on Wednesday while Treasury yields slipped a couple of basis points, perhaps assuaging rate concerns for a few hours.

Deutsche Bank delivered results that were characteristically poor – apparently, they’re going to fire some folks and reduce their global equities “ambition”. You should know the story here by now. It’s just quarter after quarter after quarter of this malaise. So good luck to Sewing on stitching this up. This pretty much tells the story there:


Oh, and Abe has denied the notion that he’s considering calling snap elections.

So that’s where everything stands, generally speaking, headed into the U.S. session. Draghi on deck.

2 comments on “The Dragon, The Riks, And The Wardrobe

  1. […] krona was funny today – remember how the Riksbank suggested a hike isn’t coming until December? Yeah, well Skingsley decided to tip October today and in a […]

  2. […] krona was funny today – remember how the Riksbank suggested a hike isn’t coming until December? Yeah, well Skingsley decided to tip October today […]

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