Trade tops emerging-market bill with growth outlook in balance

There are few if any stories in emerging markets big enough this week to eclipse the US-China trade meetings in Beijing.

Even Jerome Powell’s speech Thursday in Washington, given added significance following last week’s knock-out payrolls report, will play second fiddle to the negotiations.

The formal talks on Monday and Tuesday, the first since Presidents Donald Trump and Xi Jinping agreed a 90-day tariff-truce in Argentina last month, are likely to determine whether markets can sustain the rally Friday that drove a gauge of emerging-market currencies to the highest level since August.

Other risks lurk everywhere, from Apple’s revenue warning to the recent slew of disappointing Asian economic data. And China’s decision to cut the reserve-requirement rate merely underlined the urgency with which policy makers are seeking to arrest the economic slowdown.

New beginnings

As Venezuela President Nicolas Maduro starts his second term Thursday, there’s speculation the Trump administration will unveil new sanctions or label the nation a state sponsor of terrorism. That comes as the country braces for legal challenges from bondholders after defaulting on debt. Traders will be keeping an eye on interest rate decisions in Romania and Poland, though policy makers are forecast to keep borrowing costs unchanged. Comments from Romania’s central bank about the nation’s new taxes could move markets.

Data flurry

Chinese consumer- and producer-price indexes for December are due Thursday, and could show further evidence of weakening demand. Tame inflation, however, would give the world’s second-largest economy room for further monetary easing.

Mexico on Wednesday is expected to report that inflation accelerated last month, boosting the case for a prolonged period of higher interest rates.

Taiwan is due to release December trade figures on Monday. The island releases CPI data on Tuesday.

Czech CPI data on Thursday may give clues about the outlook for the nation’s monetary policy, with the koruna exchange rate also a key factor.

Turkey’s current-account balance will narrow in November to a $900 million surplus, economists forecast data due Friday to show. That’s down from a record $2.8 billion surplus in October.

In South Africa, manufacturing PMI for December will be released on Monday. The gauge has been below the 50 level since March, suggesting the economy is struggling to gain momentum after a first-half recession. Business confidence and manufacturing-production data comes Thursday. 

© 2019 Bloomberg L.P