Last week saw the release of a number of important economic data following the global turmoil after the collapse of stocks and the Argentine currency and growing fears of a recession in the US economy after the reversal of the yield curve.
The past days have witnessed a state of anxiety and fear dominated the global markets after expectations of a recession in the near future as clear signs emerged, prompting investors to resort to government bonds as safe havens as markets experience high volatility.
The week also witnessed a large number of events, including the developments concerning Brexit, trade talks between Washington and Beijing, and the announcement of the contraction of the German economy in the second quarter.
Britain will face disaster with Brexit
Fuel, food and medicine will leave Britain with a catastrophe if it leaves the European Union without a transitional agreement, leaked government documents showed on Sunday.
Nearly 85 percent of trucks traveling through the main canal may not be ready to deal with French customs, meaning a breakdown in ports could last up to about three months before they improve, the Sunday Times reported.
Johnson will leave for Germany and France to assure both President Emmanuel Macron and Chancellor Angela Merkel that the British parliament cannot stop Britain’s exit from the European Union, The Telegraph reported earlier.
British Prime Minister Boris Johnson is expected to tell them the two-month deadline to approve a deal acceptable to the government and parliament.
The global economy is on the verge of recession
The bond market sent investors signals the possibility of a recession in larger exports in the short and medium term after reversing the curve of US Treasury bonds last Wednesday.
Signs of recession are becoming clearer in world markets despite remarks by former Federal Reserve Chairman Janet Yellen that America will never fall into recession.
Janet Yellen said in an interview with Fox News that the US economy has the strength and ability to avoid recession, pointing out that the decline in US bond yields through which raised fears of an economic slowdown driven by a number of factors. Yellen however did not talk about the details of these factors.
However, the former Fed chairman said that the likelihood of a US economic recession is becoming more apparent to everyone and higher than expected.
US President Donald Trump renewed his attack on the Fed, posting on Twitter saying that the Fed was moving too slowly to change its monetary policy and demanded that it proceed rapidly after an estimated short-term interest rate cut. 25 basis points.
Trump described the yield curve of US bonds as “crazy” and criticized Jerome Powell, Chairman of the Federal Reserve, saying that he does not know what he is doing.
US retreats in Huawei ban
According to Reuters, the US Department of Commerce is expected to extend the deadline for Huawei to buy from US suppliers so they can serve their existing customers and extend the license for 90 days.
The US Department of Commerce agreed in May for Huawei to initially buy some US-made goods, shortly after the company on the blacklist in order to reduce the impact on its customers, many of them operate networks of the American countryside.
The extension will renew a new period which was due to expire on August 19 so that Huawei still has the ability to retain the existing telecommunications networks and provide updates to mobile phones.
US President Donald Trump is expected to speak with Chinese President Xi Jinping early next week, an informed source said.
Huawei is still barred from buying US-made component parts to produce new devices without additional special permits.
Germany’s economy shrank in the second quarter
Growth in the euro zone economy slowed in the second quarter of this year as global growth slowed due to mounting trade unrest and uncertainty over Brexit.
Germany’s economy shrank in the three months to June as global growth slowed due to mounting trade unrest between Washington and Beijing on exports and uncertainty over Brexit.
Preliminary data released by the Federal Statistics Office revealed that Germany’s quarterly GDP fell by 0.1 percent after a 0.4 percent growth in the first quarter of this year.
According to the Federal Bureau of Statistics, the decline in foreign trade slowed economic growth because exports recorded a decline on a quarterly basis stronger than imports.
Japan is the largest holder of US Treasury bonds
Japan became the largest holder of US Treasury bonds in June, surpassing China, as the trade crisis among the world’s two largest economies escalated.
According to data released by the US Treasury Department on Thursday, Japan’s holdings of US government bonds rose to the highest level in two and a half years, reaching $1.12 trillion.
China boosted its holdings of US bonds to $1.11 trillion in June, up by $2 billion from a month earlier.
OPEC cuts its forecast for global oil demand growth
According to a monthly report released last Friday, OPEC lowered its forecast for global oil demand growth this year with an economic slowdown while keeping it unchanged for next year.
For 2019, the OPEC cut its forecast for global demand growth to as high as 1.10 million bpd while keeping its 2020 forecast at 1.14 million bpd.
According to secondary sources, OPEC oil production fell by 246 thousand barrels per day during the month of July on a monthly basis to record 29.61 million barrels per day.
Donald Trump threatens to withdraw from the WTO
President Donald Trump has threatened to pull the US out of the World Trade Organization (WTO) which he has always accused of tilting China at the expense of America.
Trump said that they will leave if necessary and that they know that the intergovernmental organization have been hurting them for years.
Last summer, Trump said that the World Trade Organization had been dealing badly with America for several years.
He also asked the world body at the end of July to carry out reforms to prevent dealing distinctively with developing countries.
The administration of US President Donald Trump has been on the organization for many years to allow China to be classified as a developing country which exempts it from certain duties.
Despite the postponement of customs duties, Apple’s products will be affected starting in September
The company has benefited from the announcement by the US government to postpone the imposition of new tariffs until mid-December on Chinese imports.
A list released by Bloomberg revealed that Apple devices that will benefit from the postponement of the surcharge are all models of MacBook, iPads, iPods, Apple TV’s, Pro Display XDR’s and wired headsets.
The tariffs will remain in force at the beginning of September on a range of other products, including the MacBook, Apple Watch, AirPods, wireless speakers, Apple HomePod and others.
Huawei begins 6G research
Technology giant Huawei has already begun its research to launch the sixth generation network in its labs in Canada and this step comes at the same time that most of the telecommunications companies are still in the early stages of using and deploying 5G technology.
The companies are working closely with more than 13 universities and research institutes on 6G networks and their applications. According to Huawei’s preliminary forecasts, 6G technology is not expected to be commercially available before 2030.
There was news earlier this year that Samsung had taken the same steps in developing sixth-generation technology with its research base in Seoul.
Trade negotiations between Beijing and Washington are still planned
US President Donald Trump said Thursday that the next round of trade negotiations between China and the United States in early September in Washington is still planned.
The US president said in a meeting with reporters in New Jersey that these trade negotiations are still planned as far as he knows, less than a week after he announced the cancellation of these negotiations.
He added that more important than the new deadline for negotiations in September, they are talking by telephone and have fruitful talks.
He stressed that China wants to reach an agreement and that he will talk soon with Chinese President Xi Jinping who knows him well.
The US government announced Tuesday that it has decided to postpone the new tariffs for more than two months, which it plans to approve on a large list of imported Chinese goods such as toys and phones.
US President Donald Trump announced that the tariffs will come into effect from the first day of September after he considered the results of the last round of talks at the end of July which was in Shanghai disappointing as the Treasury Secretary Stephen Mnuchin and Trade Representative Robert Lighthizer as the negotiations had little progress.
Oil prices continue to fall
Crude oil prices fell more than 1 percent on Thursday with concerns over the global economic recession and China’s threat of countermeasures in response to new US tariffs on Chinese goods worth $300 billion.
In a sign that investors feared the world’s largest economy could head into recession, US Treasury yields flipped on Wednesday for the first time since 2007.
China vowed on Thursday to respond to the new tariffs but called on the United States to meet in the middle of a possible trade deal while US President Donald Trump said an agreement would have to be on a condition approved by the United States.
The escalating trade war between the world’s two largest economies has raised tensions in world markets and fears have grown about slowing oil demand growth.
In July, OPEC members agreed to extend oil production cuts until March next year to support prices.
China curbs gold imports as trade war deepens
China has severely restricted imports of the precious metal since May, a new move aimed at stemming outflows of dollars and boosting its yuan currency as global growth slows.
Sources said the world’s second largest economy has reduced imports to nearly 300-500 tonnes from the previous year or $15-25 billion at current prices.
The restrictions come as an escalating trade war with the US has slowed China’s growth to the slowest pace in nearly three decades and put pressure on the Chinese currency, the yuan, pushing it to its lowest level since 2008.
China is the largest importer of precious metal in the world and according to Chinese customs data, it imported 1500 tons of gold worth about $60 billion in 2018 or one third of its total global supply.
According to official data, China’s demand for precious metal jewellery and investment in bullion and gold coins has tripled in the past two decades as the country’s wealth rises at a rapid pace. On the other hand, China’s official yellow metal reserves have quintupled to about 2,000 tons.
Customs figures show that China imported 575 tons of precious metal in the first half of this year, down from 883 tons in the same period last year.