|Day's range||1.8190 - 1.8450|
|52-week range||1.4290 - 3.1030|
The latest downshift in global macro data is providing a not so subtle reminder of the pernicious effect the protracted US-China trade war is having on the worldwide economy.
FT subscribers can click here to receive Market Forces every day by email. The flipside of equities and risk asset performance reflecting an upturn in the global economy is one of rising long-dated government bond yields. This week’s sales of US 10-, and 30-year Treasury debt generated solid investor demand, illustrating there are willing buyers when yields pop to their highest levels since July.
Gold is still trading well above its August 1 low, but with Treasury yields headed toward their August 1 high of 2.06 percent, a move into this level could trigger another steep drop in gold to at least $1412.10.
FT subscribers can click here to receive Market Forces every day by email. The latest US and China trade headlines are scant on details and timing. No matter — equities are firmer, sovereign bond yields are higher (France’s 10-year yield turned positive for the first time since mid-July), while a firmer renminbi has bolstered Asia-Pacific equities and currencies.
Stocks pared losses and ended mixed after a report from Reuters that a meeting between President Donald Trump and China’s Xi Jinping could be pushed back until December.
Budget deficits do matter, Paul Tudor Jones said on Tuesday, arguing that governments cannot print money in perpetuity without consequences.
U.S. stocks were little changed as investors weighed recent optimism over U.S.-China trade talks against the latest batch of corporate earnings results and economic data, much of which came in mixed.
Rising yields and demand for risk should continue to drive the USD/JPY higher on Tuesday, but their moves hinge on continued progress in the trade talks.
It's a notable shift in leadership following months of struggles for what Wall Street calls "cyclical" stocks, which lagged due to worries about trade wars and the slowing global economy. Reports last week also showed that the job market is continuing to grow, corporate profits aren't doing as badly as Wall Street expected and interest rates will likely remain low for a while. The Dow climbed 114.75 points, or 0.4%, to 27,462.11 and surpassed its prior all-time high set in July.
U.S. stocks jumped Monday after Commerce Secretary Wilbur Ross stoked hopes that a first phase trade agreement with China would get done. The comments helped investors shrug off some unfavorable news from companies including McDonald’s and Under Armour.
U.S. stocks slid Thursday following reports that Chinese officials doubted whether a trade deal would get done, and some weaker-than-expected new economic data.
“We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the state of the economy remains broadly consistent with our outlook,” Powell told reporters at his post-meeting news conference.
Since the rate cut was widely anticipated by the financial markets, and economists had predicted the central bank would hit the pause button in December, traders showed little reaction to the news.
The S&P 500 rose to a record high after President Donald Trump touted progress for a near-term partial trade agreement with China. Stronger-than-expected earnings results also helped boost risk assets.
Global markets largely brushed off more disconcerting economic signals from China, which on Friday reported that its economy grew at its slowest pace in 26 years last quarter. The 6% growth pace China reported for July-September was worse than most economists were expecting, highlighting a global economy that is slowing. Some of the latest data for September, such as investment and lending, showed improvement, but "pressure on economic activity should intensify in the coming months," Julian Evans-Pritchard of Capital Economics said in a commentary.
With less than two weeks to go before the U.S. Federal Reserve interest rate decision on October 30, every economic report will take on added importance especially with the manufacturing sector weakening, the labor market showing signs of softening and inflation still coming in below expectations.
What traders could be waiting for is Trump’s response. Will he defy his promise to Chinese President Xi Jinping, or will he remain silent? It’s highly unusual for Trump to remain silent for too long especially when a foreign country threatens the U.S. with “strong countermeasures.”
One group like Fed Chair Jerome Powell believes the outlook is generally positive. Another believes the U.S. economy needs even easier policy to avoid sinking into a recession. Still a third group believes the Fed has gone far enough or even a little too far in trying to revitalize the economy.