ECONOMY
On Thursday, Asian shares got off to a hesitant start as investors feared a looming U.S. trade war with Mexico would further depress global growth, even as they wagered central banks would have to respond with fresh stimulus.
The RBI is expected to keep crashing crude oil prices, Sino-US trade war escalation, more demand for liquidity in the domestic market and change in stance from 'neutral' to 'moderate' in its MPC meeting.
Mexican markets were dealt an additional blow when ratings agency Fitch downgraded the country’s credit rating to BBB, while Moody’s changed its outlook to negative from stable.
Mexican and U.S. officials are set to resume talks in Washington on Thursday aimed at averting an imposition of tariffs on Mexican goods, with President Donald Trump saying “not enough” progress on ways to curb migration was made when the two sides met on Wednesday.
European Central Bank which is expected to attempt to give an ailing economy a fillip at a policy meeting later on Thursday. At a minimum, the central bank will likely offer to pay banks if they borrow cash from it and lend it out to households and firms.
Current and threatened U.S.-China tariffs could slash global economic output by 0.5% in 2020, the International Monetary Fund warned on Wednesday as world finance leaders prepare to meet in Japan this weekend.
The IMF is predicting 3.6 percent global growth for 2020, but said this outlook is vulnerable to trade tensions, uncertainty over Britain’s exit from the European Union, uncertain recoveries in some stressed economies such as Argentina and Turkey.
Wall Street had ended Wednesday in the black helped by speculation the Federal Reserve would have to cut interest rates as insurance against a tariff-driven slowdown. The Dow ended Wednesday up 0.82%, while the S&P 500 gained 0.82% and the Nasdaq 0.64%.
BONDS
Two-year Treasury yields struck their lowest since December 2017 in response, while futures have priced in around 68 basis points of easing by December.
The 2-year Treasury note yield -0.67% sensitive to shifting expectations for Fed interest-rate policy, fell 3.2 basis points to 1.839%, finishing at its lowest level in 18 months.
The 10-year note yield -0.32% was virtually unchanged at 2.119%, bouncing off an intraday low of 2.081%.
The 30-year bond yield -0.39% rose 2.9 basis points to 2.631%.
CURRENCY
Sterling would weaken considerably against both the dollar and euro if Britain left the European Union without a deal, according to strategists in a Reuters poll, with many saying the pound could reach parity with the common currency. Currently hovering around $1.27, median forecasts said cable would trade between $1.15-$1.20 within a month following a no-deal Brexit. Two said it could go as low as parity to the dollar.
The dollar fared better against a basket of currencies to trade at 97.304, having bounced from a seven-week low overnight.
The safe-haven yen was again in demand and nudged the dollar down 0.1% to 108.34.
The euro eased back to $1.1224 after briefly stretching as high as $1.1306 on Wednesday.
ENERGY
Oil prices on Thursday hovered around their lowest levels since January as markets remain under pressure from rising U.S. supply and stalling demand amid an economic slowdown.
Brent crude futures, the international benchmark for oil prices, were at $60.50 . That was 13 cents, or 0.2%, below last session's close. U.S. West Texas Intermediate (WTI) crude futures were at $51.62 per barrel, 6 cents, or 0.1%, below their last settlement.
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