Global News
US-China trade war – The trade war between the US and China escalated further this week, as China’s central bank fixed the yuan midpoint above 7 per US dollar, which is a key threshold figure between the two currencies, for the first time since 2008. This was seen as retaliation to President Donald Trump’s tweet last week, stating that he would put new tariffs of 10% on a further $300 billion in September. President Trump, on Wednesday, labelled the Chinese bank a currency manipulator, as the drop in yuan value is a means to limit the losses against its currency during the trade dispute. Chinese state run agricultural firms have also stopped buying farm goods from the US, further inflaming the situation, as the people who are affected the most from this situation are the politically sensitive states that Trump needs to keep on side as he goes in the 2020 Presidential election.
US recession odds – In a Bloomberg survey, economists were asked what their outlook was for US economic growth. It was agreed that the likelihood of a US recession within the next 12 months was 35%, as appose to a forecast made previously of 31%. Economists also see the Federal Reserve having to cut interest rates once more in 2019.
UK GDP – The UK’s 2019 Q2 Gross Domestic Product figure unexpectedly fell for the first time since 2012, dropping by -0.2%, as manufacturing data disappointed. One more output decline in Q3 would push the UK into a technical recession.
German export data – Germany’s export figures slumped in June, posting the biggest annual decline in three years, as shipments were down 8% from the previous year. The latest figures add to the evidence that the export reliant economy is being badly affected by the ongoing trade war. German is now forecast to grow by only 0.5% in 2019, which is the second lowest in Europe, just ahead of Italy.