Macrowatch – Positive soundings on US-China trade talks

Intermediate
  • The trade talks between the US and China saw positive soundings from both sides.
US China trade talks
  • There were rumours of a delayed deal signing (from November back to December), BUT both sides are said to be considering rolling back tariffs as part of the Phase One deal (though Trump stated Friday he had not agreed to this).
  • European and Asian stock averages have hit multi-month peaks in the past week and the US indices (S&P 500, DJIA and Nasdaq) have again all moved to all-time highs.
DJIA
  • US Treasury Bonds moved to higher yields with the “risk on” theme, assisted by the positive outlook for the US economy evident since the strong, early November US Employment report and in the past week the Institute of Supply Management Purchasing Managers Index data in the US highlighting a strong economy.
  • In addition, in the past week, the global PMI data from Markit (outside of the US) has also indicated that the global economy is improving.
  • With US bond yields higher relative to their global peers, the US Dollar has strengthened.
  • The market view seems to be shifting that the US Fed are done with interest rate cuts for this cycle, in the context of the “mid-cycle adjustment”.
Fed rates
  • The UK general election campaigns have kick off this past week.  Opinion polls and election battles will for now side-line the direct Brexit issue, though clearly Brexit will be a critical campaigning policy.
  • The President Trump impeachment enquiry rolls on in the US and could be moving towards a point that could see financial markets start to take more notice.

Key this week

  • On a global markets front, the US-Sino trade talks stay key to watch.
  • UK general election opinion polls and campaigns could impact the Pound and FTSE 100.
  • For Central Banks, Wednesday sees the Reserve Bank of New Zealand (RBNZ) interest rate decision; Wednesday and Thursday bring testimony to Congress from the Chairman of Fed, Jerome Powell.
  • Monday is US Veterans Day: US Bond market are closed; stock markets are open.
  • A very busy economic data calendar this week (see details below).
Date Key Macroeconomic Events
11/11/19 UK GDP, Manufacturing and Industrial Production
12/11/19 UK Employment report; German ZEW Survey
13/11/19 RBNZ interest rate decision; German, UK and US CPI; Jerome Powell testifies before Congress
14/11/19 Japanese GDP; Australian Employment; China Industrial Production and Retail Sales; German and Eurozone GDP, UK Retail Sales; US PPI; Jerome Powell testifies before Congress
15/11/19 US Retail Sales and Industrial Production

Steve Miley

Editor in chief

Steve Miley has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Market Chartist, the Editor-in...continued

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