The escalation of rhetoric in the trade war between China and the US continued to generate a negative news background. The US threatens with new and new duties, China threatens with retaliatory measures and declares that it will not yield to pressure. Trump threatened to impose duties on European goods, particularly on cars, but this matter was postponed until further negotiations were held. Nevertheless, while the attention of the press and analysts is focused on a possible deterioration of the economy in the future, companies in developed markets show record profits now, and this pushes the stock indices further up. The S & P index added almost 4% in July, the stock indexes of Europe, the result of the UX + 2% index, also increased approximately. Although now summer and parliament are on vacation, again our policy affects the economy. In July, delays in the payment of pensions attracted attention to the uncomfortably low level of liquidity in the state treasury, which probably became one of the factors that weakened the hryvnia and some decline in the quotes of Ukrainian euro bonds.
The Ukrainian economy continues its slow recovery due to the growth of domestic demand and investment. If it were not for politics, this trend could not have been worried, but the year 2019 is approaching, in which the country will need to survive presidential and parliamentary elections, as well as make peak payments on external debts, which will unambiguously add additional turbulence both in the stock market and and in the economy as a whole. In the emerging markets' bond markets, the situation is not simple, de facto, at the current rates, the capital market for Ukraine is closed. Therefore, cooperation with the IMF is extremely important. But there is no fifth tranche under the IMF program, and the fourth tranche was more than a year ago. Therefore, it is not surprising that the financial market is beginning to worry about Ukraine. For now, we believe that Ukraine will meet the IMF conditions at the last minute and will receive sufficient funding for 2019, which will avoid serious problems, but market volatility will probably only grow.
