The Commons have spoken – and they have forced the government’s hand, rendering Boris Johnson a Prime Minister in office, but not in power.
So after the tumultuous past 48 hours in Westminster, whither are Brexit and the country heading? Here’re three answers to the three key questions as we identify them right now:
The US dollar is standing tall, stubbornly refusing to do Donald Trump’s bidding. In his efforts to shrink the US’ trade deficit, the President has an intelligible interest in checking the greenback’s strength. And we think he will not refrain from the ultimate instrument to achieve this end: direct intervention by the Treasury on foreign exchange markets.
It has been being a veritable rollercoaster ride so far: the state and prospects of the US-China trade talks. Frosty periods and even break-downs were followed by mutually ostentatious good-will, only to collapse again. These days are no different: After a restart of the talks at the G20 summit in Japan in June, Donald Trump has unnerved markets and businesses again by stating that he was in no hurry to cut a deal. So how likely is an agreement between the two economic superpowers, and when, if at all, might it happen?
After an erstwhile escalation, this week appears to have brought respite for bond investors scared by deficit sanctions threatened by the EU against Italy. The populist government headed by Luigi Di Maio and Matteo Salvini seemed intent on defying Brussles over their budget entailing a massive decifit well beyond the eurozone’s mandatory fiscal standards; yet these days, they are absolving what seems to be a complete climb-down, to the huge relief of markets sending Italian government bond yields back to where they started before the stand-off. But will the truce last?
As Donald Trump has been ramping up the pressure on US trading partners, it is one of the favourite topics on the marketplace again: the Japanese Yen. Nippon’s currency is considered as a traditional “safe haven” in times of turbulence, tending to appreciate under these circumstances. Yet this time around, we project that not to happen or, if at all, in a markedly subdued fashion.
With Donald Trump threatening an escalation of the trade conflict with China again, our early analysis as much as warning at the beginning of last year becomes completely vindicated, after way too much complacency among commentators and investors alike:
Ever since its delusive cessation at the beginning of last year, most investors and analysts inside and outside of Spain had chosen to close their eyes at the pending disaster threatening to resurface again in the heated atmosphere of Spain’s general election, triggered by the very issue at stake: Catalonia breaking away from the rest of the country.