US and Russia trade tensions at rise – Danske Bank

Christin Tuxen, Chief Analyst at Danske Bank, points out that notably, tensions between Russia and a range of NATO countries flared up yesterday after Germany, France and the US called upon the Kremlin to explain its role in the recent UK spy poisoning attack.

Key Quotes

“Further, the US separately went on to sanction a range of Russian individuals and groups for election meddling and cyberattacks. Also, adding to the sense of continued political uncertainty is that US president Donald Trump supposedly plans to sack his national security advisor Herbert McMaster. Finally, US special counsel Robert S. Mueller has reportedly subpoenaed the Trump Organization for documents with ties to the case of Russia meddling in relation to the 2016 election.”

“US TICS data for January released last night shows that Chinese holdings of US Treasuries fell in the first month of the year; this takes the exposure down from a local peak in mid-2017. Albeit overall not a significant fall from the 2013 highs, it still hints at changing dynamics, partly as CNY now leads a life ‘somewhat separate’ from the USD. However, it is also a cue to current China-US tensions. Indeed, this comes after reports in mid-January that China may scale down its Treasury exposure as a form of retaliation to Trump’s protectionist rhetoric, which has in the interim been followed up by concrete measures such as tariffs and the ongoing inquiry into China’s theft of US intellectual property rights.”