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The Morning Track listening

- The Morning Track – Listening? by Bob Savage
http://track.com/articles/the-morning-track-listening/

The question for the geopolitical watchers is whether Xi and Trump listen to each other. Chinese President Xi Jinping told U.S. President Donald Trump in a phone conversation this morning that China intends to the solve the North Korea problem in a peaceful way and is determined to achieve its goal of a nuclear-weapons-free Korean Peninsula, according to China Central Television (CCTV). Xi also said the Syria problem needs to be solved using political channels and so it is important to maintain a unified United Nations Security Council to
solve the problem. Xi said he hoped the UN Security Council would speak in unified voice on the issue. Xi also said China and the U.S. need to implement of "100 Day Plan" for economic cooperation. The linking of trade and North Korea maybe the key take-away from today as the world is stuck in a no-trade zone for risk but no mood to change positions stalemate. The present situation is unlikely to change much as the news agenda in the US is more about the Bank of Canada than the US growth or inflation rate – you have to wait for Friday for that. This leaves the focus on whether the US 10Y yields are going to break 2.25% and herald a new fixed income trading band just on the basis of geopolitical jitters. Gold begs the same question with the break of $1275 begging for $1300 to be tested. The other yellow flashing signal of risk aversion is EUR/JPY which is the more traditional race to the bottom where Japan’s outlook like that for much of the world remains modestly positiv
e and yet the EUR/JPY chart suggests more deflationary fears. This is the signal for FX markets to embrace the idea that this holiday market reduction in risk is temporary and that China and the US are actually listening rather than responding.