Rhodium — mainly used in autocatalysts and five times more costly than gold — surged 31% already this month, touching the highest since 2008. Stricter emissions rules have fueled a multiyear rally and there’s speculation that investors are also jumping in, betting that prices will climb toward a record.

Rhodium rallied 12-fold in the past four years, far outperforming all major commodities, on rising demand from the auto sector. Like palladium, the metal is mined as a byproduct of platinum and nickel, but it is a much smaller market and so is liable to big price moves when supply or demand changes.

“Rhodium is subject to crazy volatility,” said Anton Berlin, head of analysis and market development at Russia’s MMC Norilsk Nickel, which mines about 10% of all rhodium. Supplies are tight and speculators stepped up buying metal after large industrial users secured volumes late last year, he said.

Rhodium was at $7,925 an ounce by Monday, according to Johnson Matthey. This month’s gain also came after investors turned to precious metals, seeking a haven from Middle East tensions and pushing palladium up about 9%.

“The main driver by the beginning of January was physical demand from Asia, which might be also automotive related,” said Andreas Daniel, a trader at refiner Heraeus Holding. “Buying triggered more buying and in an unregulated market the effect was massive, with a price move which is only seen maybe every 10 years.”

Demand cooled late last week, according to Daniel. Prices hit $8,200 on Wednesday, before retreating a bit in the following days.

Although pullbacks are possible this year, rhodium could top the record $10,100 set in 2008, according to Afshin Nabavi, head of trading at refiner MKS PAMP Group in Switzerland. Still, those lofty prices a decade ago prompted autocatalyst makers to switch to platinum and palladium, which are also used for cleaning emissions.

It’s much harder to invest in rhodium than in other precious metals. It isn’t traded on exchanges, the market for bars or coins is tiny compared with gold or silver and most deals are between suppliers and industrial users. Global production is equal to little more than a 10th of platinum or palladium output.

Higher rhodium prices are good news for South African producers, which account for more than 80% of global output. Gains in platinum-group metals and a weak rand helped a stock index for the nation’s miners to triple in the past year, reaching the highest since 2011.

But South Africa’s dominance also means production risks hang over the market. Power shortages last year temporarily interrupted some mining operations and there have been long mine strikes in previous years by workers wanting higher pay.

Apple, Tesla and Microsoft sent the S&P 500 and Nasdaq Composite Index to closing all-time highs. Gains extended after the U.S. was said to plan to lift its designation of China as a currency manipulator. Earnings from some of the biggest U.S. banks kick off the season Tuesday, amid forecasts that overall corporate profits will show the smallest growth in three years.

“Our expectation is a solid earnings season – nothing extraordinary but nothing really terrible,” Kristina Hooper, chief global market strategist at Invesco, told Bloomberg TV. “The environment is so accommodative that it really is supportive of risk assets, including equities, even if we have a lackluster earnings season.”

The pound led declines among Group-of-10 currencies after another Bank of England official pointed to a potential vote for a U.K. interest-rate cut this month and data showed that the economy unexpectedly shrank. Germany’s benchmark bund yield had its least negative closing level since May. The offshore yuan strengthened past 6.9 per dollar for the first time since July.

The dollar edged higher and Treasuries fell across the curve as the completion of the first trade deal nears; President Donald Trump has said the U.S. and China will sign the accord Wednesday. The U.S. in August first formally labeled China a currency manipulator, a move that further escalated the trade war with Beijing after the country’s central bank allowed the yuan to fall in retaliation to new U.S. tariffs.

“The consumer is super strong, the economy is strong, but slowing. The Fed’s on the sidelines. China’s on the sidelines now as a headline, and we dodged the giant bullet with Iran, no pun intended,” said Nancy Tengler, chief investment strategist at Tengler Wealth Management. “And so what you have is no news and everything is kind of OK.”

Elsewhere, equities fell in Europe and advanced in all major Asian markets except Japan, where there was a holiday, and Australia. Oil fluctuated after last week posting its steepest loss since July.

– – –

Here are some events to watch for this week:

– Phase one of the U.S.-China trade deal is set to be signed on Wednesday in Washington.

– The biggest American financial institutions kick off earnings season, including JPMorgan Chase, Citigroup, Wells Fargo, Bank of America, Goldman Sachs Group, Morgan Stanley and BlackRock.

– The U.S. releases inflation data for December on Tuesday.

– The Fed’s so-called beige book is due Wednesday.

– China GDP comes Friday.

– – –

These are some of the moves in major markets:

Stocks

– The S&P 500 Index increased 0.7% to 3,288.06 as of 4:01 p.m. New York time, the highest on record with the largest climb in more than a week.

– The Dow Jones Industrial Average rose 0.3% to 28,905.49.

– The Nasdaq Composite Index increased 1% to 9,273.93, the highest on record with the largest climb in more than a week.

– The Stoxx Europe 600 Index fell 0.2% to 418.39, the biggest fall in a week.

– The MSCI All-Country World Index climbed 0.5% to 573.41, the highest on record.

Currencies

– The Bloomberg Dollar Spot Index was little changed at 1,193.

– The euro rose 0.1% to $1.1137, the largest advance in a week.

– The Japanese yen depreciated 0.4% to 109.93 per dollar, the weakest in about eight months.

– The British pound declined 0.5% to $1.2994, hitting the weakest in more than two weeks with its fifth consecutive decline and the largest decrease in more than a week.

Bonds

– The yield on two-year Treasuries gained one basis point to 1.58%, the highest in more than two weeks.

– The yield on 10-year Treasuries climbed two basis points to 1.84%.

– Britain’s 10-year yield fell two basis points to 0.75%, the lowest in more than a week.

– Germany’s 10-year yield increased four basis points to -0.16%, the highest in almost eight months.

Commodities

– Gold depreciated 0.8% to $1,549.01 an ounce, the weakest in more than a week.

– West Texas Intermediate crude fell 1.6% to $58.07 a barrel, hitting the lowest in almost six weeks with its fifth straight decline.

In a semi-annual report, Treasury officials said no countries met the standards set by Congress for the “manipulator” label. But the political context for the decision was hard to miss.

“The Treasury Department has helped secure a significant Phase One agreement with China that will lead to greater economic growth and opportunity for American workers and businesses,” said Treasury Secretary Steven Mnuchin. “China has made enforceable commitments to refrain from competitive devalation, while promoting transparency and accountability.”

The move reversed the department’s decision in August to add China to the list. It also comes two days before President Donald Trump is scheduled to sign a partial trade deal with China in a White House ceremony that is expected to disclose the details of Chinese promises on currency and other trade matters.

Scott Kennedy, a specialist on the Chinese economy at the Center for Strategic and International Studies, said putting China on the list last year had been a “political step” designed to pressure Beijing in the middle of trade talks.

“China has not been manipulating its currency so this is just recognizing reality,” said David Dollar of the Brookings Institution, a former Beijing-based Treasury official. “The phase 1 deal confirms this so it would have been inconsistent for the U.S. to sign the deal and continue to call China a manipulator.”

Still, the administration shiftwas denounced by some lawmakers. “China is a currency manipulator-that is a fact,” insisted Senate Minority Leader Chuck Schumer, D-N.Y. “Unfortunately, President Trump would rather cave to President Xi [Jinping] than stay tough on China.”

The Treasury report criticized Beijing for turning away from economic liberalization to a more state-directed approach and “increasing reliance on non-market mechanisms.”

China’s growing use of government subsidies and coercive trade practices was “distorting” its relationships with key trading partners, the report added.

The president has long accused China of depressing the yuan’s value to make its products more affordable for foreign customers, thus contributing to the chronic trade imbalance with the United States.

One dollar now buys about 6.9 yuan, little changed from August and up about 2% over the past year.

Despite Trump’s previous claims, the International Monetary Fund has said repeatedly that the yuan is fairly valued.

In recent years, Beijing has occasionally intervened in currency markets to support the yuan’s value, not reduce it, said Eswar Prasad, the former head of the IMF’s China unit.

Chinese authorities fear that an excessively weak currency would only encourage residents to try to evade official controls and send their money outside the country, further depressing the yuan.

As a presidential candidate, Trump promised to brand China as a manipulator in his first day in office. Instead, Mnuchin opted not to designate China in 2017 or 2018, since Beijing’s behavior did not meet specific criteria detailed in a 2015 law.

In August, Mnuchin added China to the list in response to pressure from the president, even though many economists said the label was incorrect.

Mnuchin’s decision came at a time when China was not intervening in currency markets as it had in the years after it joined the World Trade Organization in 2001. China’s once-sizable global trade surplus is roughly one-tenth its 2007 size.

With the United States and China calling a truce in their two-year-long trade conflict, the Treasury’s about-face this week is not a surprise. Labeling a country a “currency manipulator” is a mostly symbolic step that requires Treasury officials to launch consultations with the offending nation.

Treasury said it would monitor the currency practices of China and nine other U.S. trading partners: Germany, Ireland, Italy, Japan, Korea, Malaysia, Singapore, Switzerland and Vietnam.

Of the total, Bt67.2 billion will be spent on developing the logistics and transport system.

One key project is the construction of friendship bridges linking Thailand with neighbouring countries.

Ten bridges have been opened, while one is under construction and four are in the pipeline this year.

Last June, the cabinet approved the building of the fifth Thailand-Laos friendship bridge. Construction will begin this year and be completed in 2022.

The other project is 746 kilometres of highways for the Eastern Economic Corridor.

The department aims to develop eight projects this year worth Bt10.51 billion.

Saksayam said that this year the department will ask for money for five mega projects costing Bt266 billion.

One of them is the construction of the Nakhon Pathom-Cha-am highway at a cost of Bt79 billion. The Finance Ministry will propose this project to the cabinet soon.

There is also a plan to construct a highway between Hat Yai and the Malaysian border worth Bt42.62 billion.

Another project is the planned extension of the Utrapimuk Elevated Tollway (Rangsit-Bang Pa-in) at a cost of Bt29.4 billion.

He added that the measures should focus on drawing investors to take advantage of the strong baht in the imports of machinery and capital goods as it will help stem rise of the Thai currency.

The two state agencies were told to submit their proposals for consideration by the BOI’s board next month.

In the week (January 13-17), Kasikornbank expectedthe baht to move within a range of Bt30.00-30.40/dollar. Key factors to be monitored closely include signals for subsequent phases of the US-China trade talks, issues surrounding Brexit and the situation in the Middle East, it said.

Somkid also told the BOI to launch new measures to promote investment in tourism sector, creative economy, and green industry. He wanted BOI to use all its tools to restructure the Thai economy.

Kobsak Pootrakool, deputy secretary-general to the prime minister for political affairs, said the BOI would convene a meeting with the Finance ministry’s departments in charge of export-import and tax collection this week to discuss relevant measures.

The value of projects applying for tax privileges at the BOI last year reached Bt756.1 billion, exceeding the target of Bt750 billion, as reported to Somkid on Monday.

The number of applications last year was 1,624, of which 506 were investments in Eastern Economic Corridor investment, amounting to Bt457.9 billion.

Chinese top applications

BOI secretary-general Duangjai Asawachintachit said last year was the first year Chinese investors led the value of the projects applying for BOI tax privileges.

Total value of the Chinese projects stood at Bt260 billion last year, up from Bt210 billion the previous year.

The jump in value was attributed to the Bt160-billion investment in the high speed train project linking three major international airports in Thailand.

Japanese investors came second with Bt73 billion in total project value, up Bt11 billion from 2018.

She added that the BOI is working on the target of total project value in the applications for privileges this year. It will be tabled for the board’s consideration next month.

Duangjai said investment trend in Thailand this year showed good signs after the board revised several rules and conditions, adding more incentives and benefits in order to accelerate investments.

The BOI reported the figures to Deputy Prime Minister Somkid Jatusripitak on Monday (January 13).

The number of applications last year was 1,624, of which 506 were for Eastern Economic Corridor investment amounting to Bt457.9 billion.

BOI secretary-general Duangjai Asawachintachit said the investment trend in Thailand this year showed good signs after the Board revised several rules and conditions, adding more incentives and benefits in order to accelerate investments.

Thanavath Phonvichai, the centre’s president of advisors, on Monday (January 13) labelled the strengthening baht the main risk factor, which could cost the Thai export sector about Bt80 billion in losses this year.

Others included a spike in global oil prices should the US-Iran conflict escalates while the drought could lead to Bt10 billion in damages to the farm sector.

An escalation of the US-Iran conflict, he said last week, could spike crude price to between US$75-80 per barrel from the current level of US$65. A price hike of Bt1 per litre in all fuel types means that Thai consumers will have to shoulder an additional living cost of Bt2.1 billion monthly.

These three factors could cost the country between Bt105 billion and Bt120 billion or about 0.5 per cent of gross domestic product, he added.

The political uncertainties is another risk factor that could dent foreign investors’ confidence, Thanavath said.

“Like the global economy, we’re moving from globalisation to ‘slowbalisation’,” Sira stated.

“Thailand’s GDP is expected to grow below 3 per cent in 2020, fuelled by tourism, government spending and domestic consumption. Still, a significant risk factor to watch this year is growing tension between the US and Iran, and how that affects the global economy. The ongoing trade war between the US and China also poses a downside risk, potentially leading to a slowdown in global trade that causes an export slump and Thai baht fluctuation,” Sira added.

Global economic growth in 2020 is expected to grow at a rate of around 3.4 per cent in purchasing power parity terms compared to its long-term average of a 21st century average of 3.8 per cent per year, according to new projections by PwC.

PwC predicts that 2020 will be a year of “slowbalisation”, where trade tensions continue to create challenges for global supply chains and increased integration of the global economy.

Nevertheless, PwC expects that services will remain a bright spot for world trade, with the total global value of service exports forecast to hit a record $7 trillion (Bt211.4 trillion) in 2020.

The US and UK are likely to remain the leading exporters of services, although China is expected to overtake France in fourth place during the year.

Uncertain outlook for global trade

The overall picture for 2020 is that global economic growth will continue at a modest pace, as the major economies will be buoyed by accommodative financial conditions and an increased reliance on household consumption as a source of growth instead of net exports and investment.

“Globalisation has been a defining feature of the global economy since the 1970s,” Barret Kupelian, senior economist at PwC UK, said. “Yet the global volume of merchandise traded slowed down dramatically and even went into reverse in 2019. Coupled with the effective disbandment of the World Trade Organisation’s dispute settlement mechanism in December, we can expect more challenging times ahead for global trade.

“Yet we should be clear that this is a period of ‘slowbalisation’ – with integration and trade flows still growing, but at a slower rate. Given the links between merchandise trade flows and economic growth, we can expect to see a similar effect of below-average growth in the global economy in 2020.”

More jobs across the board

PwC expects the G7 to continue to create jobs – to the tune of around 2 million. Four out of five new jobs in the bloc will be created in the US, UK and Japan.

As the pool of labour resources in the G7 gradually dries up, earnings will continue their upward trajectory. But in the absence of productivity improvements, corporate profit margins could be squeezed.

Similarly, the International Labour Organisation expects the seven largest emerging economies – the E7 – to create about 8 million jobs in net terms. The ILO’s employment projections for the G7 show that jobs will be taken up by men and women in equal measure. Within the E7, however, the ILO expects job creation to be less evenly distributed across genders.

India expected to rise

According to the International Monetary Fund’s latest estimates, 2019 was the year when India overtook the UK and France to become the fifth largest economy in the world.

India is likely to overtake Germany before 2025 and Japan before 2030 to become the world’s largest economy behind China and the US.

France and the UK will now vie for sixth place in the rankings, with their relative position dependent on the value of the pound against the euro, which may remain volatile in 2020.

US, China largest oil consumers

Global renewable energy and nuclear consumption will make up more than 20 per cent of global energy consumption, which is the highest it has ever been. The rise of renewable energy reflects how businesses, households and governments are adapting and changing their attitudes.

China is expected to be the largest consumer of this type of energy, closely followed by Europe. However, oil is expected to continue to remain the most preferred source of energy in 2020 for the world economy, followed by coal and natural gas. The US and China will remain the largest consumers of oil in the world in 2020.

Global population biggest it has ever been but also greyest

In 2020, the world’s population is expected to reach 7.7 billion, which is around a 10 per cent increase compared to a decade ago.

China, India and Sub-Saharan Africa are expected to drive around half of the world’s annual population increase.

At the same time, the number of people above the age of 60 globally is expected to surpass the one billion mark. China is expected to have a larger number of people above the age of 65 than all the six other largest emerging economies put together.

The full edition of Global Economy Watch – 2020 Predictions, with further forecasts and analysis, is available here: