Take Five: flirting with zero

LONDON (Reuters) - 1/BACK TO ZERO Few people will be brave enough to call at the end of the 30-year bond run, but the idea that loan costs below zero may not exist forever is an increasingly willing people to entertain. Optimistic economic data, the signs of a truce of the trade war and, above all, the clear reluctance of central banks to further reduce interest rates have reduced the group of global bonds with a negative yield to $ 12.5 billion of $ 17 billion two months ago. In Europe, Germany's long-term government borrowing costs recently increased above 0%, while 10-year yields increased 50 basis points from the lows in early September. Finnish, Belgian and Austrian 10-year returns are also flirting with the zero mark. But, are we seeing another 'bond tantrum' that will soon disappear, such as the Bund's mass sale in April 2015? It is true that inflation below the target and deeply negative interest rates in the euro zone, Japan and elsewhere mean that negative returns will not disappear in the short term. Above all, some governments, such as Germany, still oppose the increase in state spending to boost growth. Therefore, money managers will distrust reducing bond exposure. However, they will realize that with such low yields, even small increases will cause the collapse of bond prices, with the risk of large losses in their portfolios. Several countries, from Germany to Japan, will release growth data for the third quarter in the coming days: a robust set of figures could bring yields even further towards zero. Heat map of Eurozone sovereign bond yield - https://fingfx.thomsonreuters.com/gfx/mkt/12/8439/8364/heatmap%20nov%208.png 2/INFLATION, WHERE ARE YOU? The Fed lowered interest rates for the third time on October 30, even with the economy in good condition. So what does it give? The real concern is inflation, too little, not too much! The quarter-point series of insurance cuts comes amid concerns over a global slowdown that is spreading and is aimed at counteracting low inflation, keeping rates low and reducing the Federal Reserve's ability to fight the next recession. Underneath it all, stalks the spectrum of deflation, or Japanese-style deflation that crushes demand. Wednesday brings the October Consumer Price Index, followed by the appearance of Fed Chairman Jerome Powell before the joint economic committee of Congress. The basic interannual CPI is expected to be 2.4% and the holder 1.7%. But the Federal Reserve's favorite measure of personal consumption expenditures is around 1.6%, which is mainly below the 2% target since the pre-financial crisis. The Fed said it could wait until 2020 to cut again. Chicago Fed Chairman Charles Evans said rising inflation expectations are key. It seems an uphill battle as consumer inflation expectations are declining even though wages are rising. On Friday, October, retail sales and industrial production data will shed light on whether the consumer can continue to drive growth against a struggling manufacturing sector and months of commercial tensions. US price UU., Salary growth: https://fingfx.thomsonreuters.com/gfx/ce/7/7278/7260/Pasted%20Image.jpg 3/FAIR TRADE The Annual China International Import Exhibition in Shanghai is closed over the weekend, where US companies are in force. A large number of global investors at the Reuters 2020 Investment Outlook Summit declared an unwavering enthusiasm to stay invested in a market that has performed extremely well in 2019 and is expected to work just as well in the coming year. To this enthusiasm between companies and investors are the headlines of news about the gradual progress towards some kind of commercial truce between the United States and China. But details are still scarce and, in fact, there isn't much to cheer up in China this month. October is seasonally weak due to the long National Day holiday, and recent data shows that the trade war continues to affect exports and demand. Economic growth has fallen to its weakest point in three decades, forcing the central bank to make its first rate cut in almost three years and pump cash to the markets. Key data on loans, investment and inflation will be received in the coming days. Although the uproar over another regional bank fades, investors hope to obtain evidence that bank loans and social financing deteriorated further, inflation remained high due to rising pig prices and investment in Factories became depressed. China TSF, GDP and markets - https://fingfx.thomsonreuters.com/gfx/mkt/12/6912/6843/Pasted%20Image.jpg 4/WHEN DONALD MEETS TAYYIP Turkey's president Tayyip Erdogan heads to Washington for a party with his American counterpart, Donald Trump, on Wednesday. The two have much to discuss: the commitment or withdrawal of Turkish and US forces in northern Syria and related bilateral agreements, as well as the purchase of Ankara from the S-400 missile defense system of Russia, which according to law American should trigger sanctions. Then there is a court case in the United States against state-owned Halkbank for evading sanctions in Iran. Meanwhile, a vote of the US House of Representatives. UU. To recognize the mass murders of Armenians a century ago as genocide has irritated Ankara. It is said that the two men have a strong bond, according to Turkish sources. The lyre, a weather vane for Turkey's economic outlook but also for the state of its geopolitical relations, especially with Washington, is on its way to an 8% drop in 2019, its seventh consecutive year in red numbers. Such personal ties could prove crucial to Erdogan, who seems skilled at managing his relationship with the man in charge of his greatest NATO ally, but may face much more hostility from the United States legislative branch. The long decline of the lira: https://fingfx.thomsonreuters.com/gfx/mkt/12/8438/8363/The%20lira's%20long%20decline.png 5/BRICS BASH Leaders from Brazil, Russia, India, China and South Africa meet in Brasilia for their eleventh summit on Tuesday. With a third of the world's GDP, the block has become a political organization, which also has its own development bank. It has been a long road since Goldman Sachs analyst Jim O'Neill coined the term BRIC in 2001 to describe a grouping of the four largest emerging markets. The term has evolved from a catchy acronym to an investment concept that generates dozens of funds that manage about $ 25 billion at its peak. Since then, most of the BRIC funds have been quietly closed, but the countries themselves have adopted the grouping, only now they are BRICS, with the incorporation of South Africa. However, times are difficult. China is in a trade war that is damaging its export-dependent economy and Moody's has reduced India's credit rating due to concerns about growth and the banking sector. Russia's economy is semi-stagnant, under the sanctions of the United States and the horns blocking Turkey with the domination of the Middle East. Brazil, which has just emerged from a brutal recession, is struggling to pass vital reforms. South Africa, with anemic growth, runs the risk of losing its investment grade credit rating, which reduces access to valuable investments. The next summit will focus on economic growth for an innovative future. Given all the problems the quintet faces, innovation can be key. Stumbling BRICS - https://fingfx.thomsonreuters.com/gfx/mkt/12/8446/8371/Stumbling%20BRICS.png (Report by Vidya Ranganathan in Singapore, Alden Bentley in New York, Sujata Rao, Dhara Ranasinghe and Karin Strohecker in London; Hugh Lawson Edition) This story has not been edited by The Times of India and is automatically generated from a syndicated feed to which we subscribe. (This story has not been edited by timesofindia.com and is automatically generated from a syndicated feed to which we subscribe.)