Lagarde Succeeds
Christine Lagarde is set to swap the IMF for the ECB, replacing Mario Draghi at the central bank just as the bloc’s economy looks in need of fresh stimulus. Investors will likely bet that as a seasoned crisis-fighter, Lagarde will share Draghi’s taste for aggressive and innovative monetary policy. German Defense Minister Ursula von der Leyen was nominated to be the next European Commission head. The selections, which must be ratified by parliament, mark the first female leaders for both institutions.
Havens Are Back
Stocks in Asia look set for modest declines and havens are back in play. U.S. stocks edged higher, as investors surveyed the outlook for Fed policy and trade talks. But the Treasury rally resumed, with 10-year yields down five basis points below 1.98%, and gold jumped back up above $1,400. The dollar fell against most G-10 currencies, with the yen gaining the most.
Oil Plunges
Oil had its worst reaction to an OPEC meeting in more than four years, as a deal to extend output cuts reinforced concerns over a weak demand outlook. Non-OPEC producers including Russia ratified the group’s decision to prolong the existing curbs for another nine months. Ministers also signed a charter intended to make long-term collaboration more formal at their joint meeting.
Hong Kong Winner
Hong Kong’s protesters have benefited from broad support among businesses and ordinary citizens. But Monday night’s ugly demonstrations risk losing some of that backing — and giving a boost to Hong Kong Chief Executive Carrie Lam, the pro-Beijing leader they despise. Few in the city are likely to support actions that disrupt daily business. Allowing Lam to position herself as a guardian of order may give the leader a new lease on political life.
RBA on Hold
Australia’s central bank governor signaled he’ll stand pat in coming months to observe the impact of back-to-back interest rate cuts. Reserve Bank chief Philip Lowe, in an evening speech after taking the cash rate down to 1% earlier Tuesday, cited rising risks to global growth from the U.S.-China dispute. In Australia, he noted low borrowing costs, high commodity prices, a weaker currency and rising household incomes were cause for optimism.
