Nomura

Will we have a Brexit deal agreed soon, Italy's growth outlook and what lies ahead for US-China trade wars?

  • What is the UK event risk timeline with Brexit negotiations at crunch time?
  • How is Italy approaching the future and what risks on growth are there with the fiscal deficit announcement looming?
  • We take a more hawkish view on the US-China trade dispute and this month will prove critical for this relationship and NAFTA negotiations

The global slowdown, and more specifically the Eurozone impact, is on our radar. Our FX Strategist, Jordan Rochester, speaks with our Italian Economist, Chiara Zangarelli, to look at the issues Italy is facing, the Brexit timeline and thoughts on where the US-China trade relationship is heading.

After September's Salzburg Summit and the UK Conservative Party's conference in October, the mood music on Brexit has shifted more to how soon a deal can be done and the continuing negotiations, which are now slightly less public than before. The key dates in the short term timeline are:

  • 15 October: When both sides hope an outline deal will be made
  • 16 October: UK Cabinet meeting outlining the new negotiated deal with the EU
  • 17 October: Prime Minister May has dinner with EU leaders (there is potential for late night talks to go on and for last minute compromises)
  • 18 October: EU leaders meet to conclude their thoughts for approving a November summit to sign off the deal
  • 29 October: UK budget
  • 17/18 November: Potential summit to sign off the agreed deal
The event risk timeline for the UK until December 2020

While we think it is early days to call a recession for Italy, there is clear risk on growth, inflation is subdued and the fiscal deficit is driving market behaviours - Italy's Economic and Financial Document could have an impact on Italy's credit rating.

Moving further afield from Europe, we're taking a more hawkish view on the US-China trade position and carefully watching the ongoing NAFTA negotiations.

For full insights and the trades we recommend, read European Perspectives: Italy's budget and Fading the peak in 'No Deal' pricing.

Contributors

  • Jordan Rochester

    FX Strategist

  • Chiara Zangarelli

    Italy Economist

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