Good news from the 2015 EU–China Summit: Europe appears on track to taking itself and its relationship with China more seriously. The launch of the Connectivity Platform was an important outcome of the high-level meeting. It shows that the European Union is not a mere partaker of China-led initiatives, but a moderator and controller of quality for China’s vast ambition to reshape its global economic governance reach.
As defence chiefs from 26 countries gathered for the annual Shangri-La Dialogue security summit in Singapore in May, all eyes were on the US Secretary of Defense Ashton Carter and his Chinese counterpart Admiral Sun Jianguo, Deputy Chief of the General Staff of People’s Liberation Army. As expected, maritime disputes in the South China Sea dominated the event. However, another equally important topic for discussion were the security challenges faced by small states in the Asia Pacific.
Canada and Israel have long enjoyed a mutually beneficial trade arrangement. That relationship strengthened even further on Tuesday when the two nations announced a new free-trade agreement expected to facilitate the import of fish and baked goods to Israel and the export of farm products and wine. The new agreement has the formal title Canadian-Israel Free Trade Agreement (CIFTA).
The week saw a sudden calm in several markets as China showed signs of renewed economic strength and Greek banks reopened, but falling commodity prices have hurt export-driven economies’ currency values and future inflation expectations.
In Greece, banks reopened earlier this week after three weeks of closure. Controls on withdrawals remain in place, with Greeks limited to taking out 420 euros per week from their accounts, but the banks are open for business and relatively calm queues have appeared at most banks throughout the week.
The US dollar is under pressure today. There are many small triggers but the news stream itself is relatively mild. Ultimately, the inability to extend last week’s momentum left the dollar bulls vulnerable. As we noted, that the momentum the dollar enjoyed took place without the backing up of short-term US interest rates to support the dusted-off divergence narrative as the Greek situation returned to chronic from acute and the Chinese stock markets stabilized.
The relatively light news stream continues to facilitate corrective action in the capital markets. The advancing streak in global equities has broken while Chinese shares continue to stabilize after their recent dramatic slide. Peripheral bond markets are giving back some of their recent gains. The US dollar fell from its recent highs but it is largely in a consolidative mode.
Leadership is one of those things about which it is sometimes wise to be careful what you wish for.
The light news stream has spurred some position squaring by short-term momentum traders. This is giving the dollar a somewhat heavier tone, and weighing on European equity markets. European bonds and Treasuries are little changed, though slightly firmer.
The global capital markets have entered a new phase. The transition has partly been obscured by the crisis in Greece and the sharp fall in Chinese shares. The policy response to those events is key. Similarly, the policy response to Great Financial Crisis differed, so it is hardly surprising that after a lag, the macroeconomic outcomes are different.
David Cameron caught some by surprise when he announced a new consultation by the government equalities office aimed at “closing the gender pay gap.” Although the Conservative party’s 2015 election manifesto included a pledge to “achieve full gender equality”, many of the proposals under this heading looked more like vague promises than explicit commitments to action.
