Merkel on backstop "We will think about a Practical Solution"
Italy PM Conte resigns ending current Government
US Pompeo says "China should respect willing of people in HK"
It's a bit of a roller coaster out there as the market awaits the FOMC minutes tomorrow and the Jackson Hole speech on Thursday which has historically been the best place for central bankers to hint new policy moves. Central Banks around the world are called to respond to the current economic slowdown. However, political risk is the theme of 2019 and is likely to remain as such for the rest of the year. Italian risk looms following the resignations of PM Giuseppe Conte after Salvini decided to pull the plug from the current government. The next steps will require President Mattarella to decide whether to appoint a caretaker government or announce a snap election. Not too far away, German Chancellor Merkel commented that the EU is thinking about a "Practical Plan" on the Backstop. A comment that came after PM Jhonson letter to the EU setting out his opposition to the Irish backstop.
Equities remain on hold ahead of the FOMC minutes tomorrow and Powell speech on Thursday. SP500 traded firm above the 2900 level after initial weakness at the US open dragged by the energy complex. The FX space traded mainly choppy as traders await more important events ahead. EUR traded slightly positive on the sympathy of GBP outperformance after Merkel remarks.
Crude traded range-bound above the 55 level after Greece said it had not received a request from the Iranian tanker - object of a raw with the US - to dock at one of its ports. Gold traded choppy after an indecisive session.
Bond Yields continue to hedge lower with the US yield curve now 70% inverted amid mounting concerns on the economy.
If you missed the morning briefing from the desk click HERE