Rebellion in Europe?

Posted by: Paul Donovan

25 May 2020

Daily update

  • The UK and the US are on holiday, but Sino-US relations still worry markets. China's foreign minister increased the level of rhetoric, and investors are focused on any US reaction to protests in Hong Kong. The Trump Twitter Feed has been quiet on the topic, suggesting that the trade deal will not be threatened.
  • The EU Commission will publish proposals for a fiscal response this week. France and Germany want a grant-based system, but over the weekend there was some rebellion. Four other European countries are pushing for loans instead. If history is a guide, negotiations will drag on, there will be an all-night summit, and then a compromise.
  • German final first quarter GDP is not expected to be exciting. A business confidence opinion poll is also scheduled, and is not worth bothering about. Japan's government is to lift the state of emergency in Tokyo.
  • The UK is also preparing to lift restrictions, but attention is focused on accusations that the prime minister's most senior aide broke lockdown rules. This may matter to markets. A sense of national unity will help with the economics of the bounce back, and the aide in question was a key part of the interminably tedious EU-UK divorce.

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