Take Five: The clocks are ticking down
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[December 05, 2020] (Reuters)
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1/BREXIT MARATHON
An EU official likened the current state of Brexit negotiations to a
marathon where runners are "past kilometre 40" of the just over 42-km
race. But four weeks before the transition period expires, a no-deal
outcome is clearly a risk.
Britain is also about to irk the EU further; on Monday, its parliament
will press ahead with draft laws that breach an earlier divorce treaty
with the bloc. It also plans new legislation, potentially with more
provisions overruling parts of an earlier EU withdrawal agreement.
-Britain to press ahead with Brexit treaty-breaking laws next week
-EU-UK trade deal hangs in the balance with four weeks to go
2/EURO WEEK
A big week for the euro area. A two-day EU meeting from Dec. 11 will try
to break a stalemate over a 1.8 trillion-euro spending package to aid
COVID-hit economies, currently being blocked by Poland and Hungary.
Poland now suggests it may compromise. And the ECB, which has long urged
more fiscal stimulus, will be hoping a compromise is reached. It meets
on Thursday and is expected to ramp up monetary support for the economy.
Some reckon it may be tempted to hold back some firepower to encourage
EU leaders to end their deadlock. But that move carries the risk of a
market setback.
The euro at 2-1/2-year highs is another complication for inflation and
economic growth. That might well encourage the ECB to do more rather
than less.
-ECB looking at more than two instruments to help euro zone: Lane
3/SHUTDOWN
The clock is ticking on the Dec. 11 deadline for the U.S. Congress to
approve an omnibus spending bill to prevent a government shutdown.
But despite potentially nasty implications for the economy, investors
have taken past shutdowns in their stride, with the S&P500 edging lower
in only two of the past 10 such episodes. And markets remain at record
highs.
The raging pandemic gives lawmakers an added incentive to avoid a
shutdown that could hurt the nascent economic recovery.
Investors will also keep an eye on stimulus proposals, given as
Republicans and Democrats in Congress remain unable to reach agreement
on economic relief measures.
-Deal on fresh U.S. coronavirus relief eluding congressional
Republicans, Democrats
-As stocks soar, government shutdown looms in midst of pandemic
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A small toy figure is seen in front of a Brexit logo in this
illustration picture, March 30, 2019. REUTERS/Dado Ruvic/Illustration
4/SIZE MATTERS
Chinese trade figures land on Monday, hard on the heels of bumper Purchasing
Managers' Index readings that showed the economy powering back from the
pandemic. Expect more of the same: faster expansion in imports and exports, plus
a steady trade surplus.
But as markets begin to pay attention to U.S. President-elect Joe Biden's
policies, the U.S.-China trade balance is worthy of attention. Its size mattered
to Donald Trump as a trade-war scorecard, and it may yet count for something for
his successor.
Biden has already given the yuan a nudge when he said he didn't plan to roll
back tariffs Trump had slapped on China. Traders have shrugged that off and
hoisted the yuan to a 29-month top, but a whiff of misplaced confidence remains.
-POLL-China's exports, imports seen expanding at faster pace in November
-Biden says will not kill Phase 1 trade deal with China immediately -NYT
5/LATIN TRIO
Brazil's central bank governor Roberto Campos Neto called the prospective
COVID-19 vaccine a "game-changer" for the stricken continent. So while upcoming
central bank meetings in three South American countries are unlikely to yield
interest rate changes, investors will listen for guidance on the policy outlook.
Traders polled by Reuters predict Chile's 0.50% interest rate, its lowest in a
decade, will be held unchanged on Monday.
Brazilian rates are already at a record 2% low. Brazil's rate-setting committee
maintained at the last meeting a pledge to keep rates lower for longer and may
repeat that at its Tuesday-Wednesday meeting.
The easing cycle may be running out of steam in Peru, where central bank
officials meet on Thursday. Interest rates have been at historic lows of 0.25%
since April.
-Brazil's Campos Neto says COVID-19 vaccine would be 'game changer' for economic
policy - Reuters
(Reporting by Sujata Rao, Dhara Ranasinghe and Tom Arnold in London; Saqib Iqbal
Ahmed in New York and Tom Westbrook in Sydney; Editing by Catherine Evans)
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