Focus is on growth and inflation with policy mistakes the bigger worry. The move in U.S. bond yields higher overnight is worth watching particularly with CBO today at 2 pm and heavy supply later this week, writes Bob Savage, CEO of Track Research Monday.
Markets traded early on President Trump sounding upbeat on the potential for a U.S.-China trade deal. Headlines about North Korea willing to come to the table to discuss denuclearization added to a risk-on mood.
Beijing will relax its restrictions “because it’s the right thing to do,” Trump tweeted on Sunday, adding that deals will be made on tax reciprocity and intellectual property. Meanwhile China monetary policy advisor Fan Gang said a trade fight is unavoidable, as the U.S, tries to contain China’s rise in the world. China Ambassador to the U.S. noted in an interview that the U.S. is only caring for itself, forgetting the lessons from 2008. USTR Navarro said the tariffs aren’t a tool to talks, and that the U.S. is standing up for American interest.
Larry Summers argued over the weekend that Trump’s trade threats lack credibility. The main problem stems from the fact that the U.S. wants more benefits from its trade with China, Cui said. However, a trade war will only make both sides lose their share of the trade pie.
There is a real fight building up elsewhere after the weekend new of gas attacks in Syria, Israel bombs a key airbase of Assad while the U.S. pushes for action at the UN and Trump chatter is for a larger U.S. missile response.
The biggest stories overnight aren’t about trade or more Syrian conflict but about the global growth recovery sagging – and the economic data support this worry with Japan consumer outlooks sagging, with German trade lower, with the Eurozone Sentix investor survey dropping.
Many see global growth as a weather story, others as a Trump problem – but either way – focus is on growth and inflation with policy mistakes the bigger worry.
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