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The ripple effects of US/China trade hopes and UK/EU Brexit deals dominated overnight trading. The mood isn’t great as the splash of tweets last week didn’t follow with a rock from China. The Xi comments from the China International Import Expo suggest the path for a US/China deal isn’t so obvious. He noted China's economy is "a sea, not a pond," so it can weather storms. China is willing to quicken the negotiations of investment agreement with the EU and free trade zone with Japan and South Korea. China will continue to be a source of global growth and an active contributor to global governance. So the edge is off the rally in Asia and that means the EU calm may not last as the US markets open and reconsider positions ahead of a heavy week with elections tomorrow, FOMC on Thursday and plenty more economic data to consider. While the playbook for the week was supposed to be the ripple effect of bond yields hampering equity bullishness, this isn’t the wave for today
. Instead we are still mired in growth concerns. China Composite Caixin PMI is at 28-month lows, UK Services PMI worst since the March snow storms. The exception and perhaps the most interesting outcome was the bounce in Japan services. The most interesting story from today’s price action is in safe-haven demand remaining modest in JPY, CHF and Gold despite the pull-back in Asian stocks and EM FX. Markets are looking for a bigger ripple of hope rather than a rogue wave in this pond of modest trading ahead of the ocean of news ahead. The JPY weakness today stands out and confirms the broader uptrend belief – with 112.80 the pivot to watch today
The Morning Track not-a-pond
- The Morning Track – Not a pond by Bob Savage/articles/the-morning-track-not-a-pond/
The ripple effects of US/China trade hopes and UK/EU Brexit deals dominated overnight trading. The mood isn’t great as the splash of tweets last week didn’t follow with a rock from China. The Xi comments from the China International Import Expo suggest the path for a US/China deal isn’t so obvious. He noted China's economy is "a sea, not a pond," so it can weather storms. China is willing to quicken the negotiations of investment agreement with the EU and free trade zone with Japan and South Korea. China will continue to be a source of global growth and an active contributor to global governance. So the edge is off the rally in Asia and that means the EU calm may not last as the US markets open and reconsider positions ahead of a heavy week with elections tomorrow, FOMC on Thursday and plenty more economic data to consider. While the playbook for the week was supposed to be the ripple effect of bond yields hampering equity bullishness, this isn’t the wave for today
. Instead we are still mired in growth concerns. China Composite Caixin PMI is at 28-month lows, UK Services PMI worst since the March snow storms. The exception and perhaps the most interesting outcome was the bounce in Japan services. The most interesting story from today’s price action is in safe-haven demand remaining modest in JPY, CHF and Gold despite the pull-back in Asian stocks and EM FX. Markets are looking for a bigger ripple of hope rather than a rogue wave in this pond of modest trading ahead of the ocean of news ahead. The JPY weakness today stands out and confirms the broader uptrend belief – with 112.80 the pivot to watch today
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Robert Savage
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