This is the most unproductive day for work ever. Computing power at work is used for booking trips, grabbing online discounts and digesting a raft of holiday related emails, writes Bob Savage Monday.
Trolling the internet for deals is perhaps a good way to think about how markets are reacting to the news headlines today – they are ignoring the bad and accentuating the good.
Internet sales over the holiday weekend support the view that U.S. demand is just fine. Despite that e-commerce shove, the alternative money bitcoin (BTC-USD) continues to collapse, now below $4000. This despite the need for safe-havens like gold.
The weekend brought the usual geopolitical ugliness – Russia blocking the Ukraine shipping in the Sea of Azov. Russia on Sunday seized two small Ukrainian armored artillery vessels and a tug boat, which Moscow said had illegally entered Russia’s territorial waters. The sea lane was opened Monday after international pressure. NATO plans to hold an emergency meeting to discuss Ukraine.
China adds to pressure on Taiwan’s president after poll defeat. Tsai, who faces presidential elections in a little over a year, resigned on Saturday as chairwoman of the Democratic Progressive Party (DPP) after losing key battleground cities in mayoral polls to the China-friendly Kuomintang. The DPP now only controls six cities and counties to the Kuomintang’s 15. The official China Daily said in an editorial Tsai had ignored Beijing’s “cooperative stance” and forced relations into a deadlock, and that “her separatist stance has lost her the support of the people on the island.”
Not the news was bad for markets, with the Italian government seen bowing to budget pressure from the EU. The governing coalition is discussing reducing next year’s budget deficit target to as low as 2% of gross domestic product from the draft budget target of 2.4% of GDP, a government source told Reuters.
Against the politics is the usual set of economic data.
New Zealand retail sales lower, Japan flash Manufacturing PMI at 2-year lows with orders lower along with confidence, and with German IFO lower – suggesting 4Q weakness extends with no bounce back.
This is a market obsessed about U.S. divergence still, but the news overnight is all about hope and watching the G20 to see if there is a trade deal and a bounce back to globalization trends.
The chart that matters is in 10-year yields with the FOMC minutes and a host of FOMC speakers driving the argument that Fed hikes are closer to the end – stalling the U.S. dollar (USD) rally, helping oil and equities and making the double top in 10-year yields important.
Reuters: Dollar steady in safe-haven trade, sterling gains slightly Monday on Brexit deal news.
Watching 3.10% and 2.98% today and this week for proof that something has changed.
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