The 26th meeting of the North East Asia Cooperation Dialogue (NEACD), a one and a half track forum whose membership mirrors the Six-Party Talks, was held in Beijing late last month. North Korea began to attend the NEACD in 2002, but failed to show up in 2014 and 2015.
Sterling is leading the new appetite for risk as one element of political uncertainty has been lifted. It is moving higher for the third consecutive session today; advancing by more than 1.5 cents to reach $1.3180. It staged an impressive recovery yesterday after trading down to $1.2850, nearly a retest on last week’s 30-year+ low just below $1.28. Recall last week’s high was set near $1.3340.
International media have come to focus on Tuesday’s anticipated decision in the Philippines’ arbitration against China. Beijing’s recent propaganda and diplomatic blitz has raised the prominence of the case to new heights.
The dispute involves no fewer than 15 issues, many of them highly technical. Yet the basic issue in the case — whether the decision will be legally binding on China as well as the Philippines — is reasonably straightforward. Still there appears to be widespread misunderstanding surrounding it.
The combination of the rebounding US job growth and gains in the S&P 500 to near record levels before the weekend is helping boost the US dollar against the major currencies, while the emerging market currencies are mixed. In addition, indications that Japan will put together another fiscal stimulus package and the Bank of England may cut rates late this week are helping global equities.
Investors are under siege. A growing proportion of bonds in Europe and Japan offer negative yields. The German and Japanese curves are negative out 15-years, while one cannot find a positive yield among any tenor of Swiss government bonds. Despite a string of robust data, US Treasury coupon yields are at record lows.
The US dollar had a good week. It was helped by the strongest service ISM this year, with strong gains in forward-looking new orders component and an increase in export orders. Non-farm payrolls snapped back from a downwardly revised 11k jobs (-6k private sector) to 287k (265k private sector).
It was the strongest employment gain in eight months. In addition, as more bonds denominated in euro, yen, and Swiss francs offer negative nominal yields, an increasing part of the world’s savings appear to be drawn to the positive returns of dollar-denominated paper.
The history of the Japanese military’s wartime sexual enslavement of women still plays on the mind of East Asia. Japanese leaders make it hard to forget. Most recently, deputy foreign minister Shinsuke Sugiyama told the United Nations Committee on the Elimination of Discrimination Against Women that his government knew of no documents confirming the forcible wartime recruitment of so-called ‘comfort women’.
There is something for everyone in today’s US jobs report, and at the end of the day, it is unlikely to sway opinion about the direction and timing of the next Fed move. The greenback itself may remain range bound after the initial flurry. On the other hand, the disappointing but noisy Canadian data underscores the risk of a more dovish slant to the central bank’s neutral stance next week.
Initial previews of America’s job market indicate resurgence for workers, but economists remain wary. Jobless claims fell to their lowest point in three months last week, falling to 254,000 versus 270,000 the previous week. That is far below consensus expectations of flat jobless claims, as more Americans find new jobs and return to work.
The US employment data tends to be among the most important economic reports during the monthly cycle. It often injects volatility into the market. The report itself tends to be volatile and subject to revisions. Economists have little input on which to base their forecasts.
