Market reaction suggests that this US legislation does not alter the overall dynamic – Rabobank
|Analysts at Rabobank examine the market’s reaction to the United States (US) President Donald Trump’s passage of Hong Kong bill while signaling a less impact on the overall market dynamics.
Key quotes
"US President Trump signed the Hong Kong Human Rights and Democracy Act into law. Of course, this should have been expected. Despite some chatter of a 'pocket veto' or an actual veto, it was always overwhelmingly likely that this was going to happen."
"Now the wait begins to see just how strong the pledged Chinese response will be, and how much it impacts on the 'Final Countdown' phase one trade deal."
"Market reaction so far (100 pips in CNY) suggests that the feeling remains that this US legislation does not alter the overall dynamic in any major way. Latin American currencies, aside from MXN, continue to slump, with Brazil and Chile and Columbia all saw a slide in their currencies to record lows."
"Which, of course, means that the reaction will then be that much stronger if China really does follow through on its threat of unspecified 'counter-measures'."
"This synchronised global recovery is doing just fine, folks, and central-bank easing to date has definitively set the stage for it to continue for the foreseeable future….right?"
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