FED Powell says "current stance of monetary policy likely to remain appropriate depending on incoming data
Trump says US will increase tariffs on China in case the first step of a broader agreement isn't reached
Trump impeachment hearing begin US Core CPI for October in line with expectation
I am still trying to understand what is more ridiculous if me ruining my dinner listening to Trump last night or the fact that his speech ended up not containing any major policy announcement. Moreover, today we had expectations for an announcement or decision about European auto tariffs after the last 6 month extension. According to Politico (on Monday) the WH is likely to postpone the decision for another 6 months. Therefore, again mixed signals from Washington after last week reports suggested that the US had reached an agreement with China to roll back tariffs. No clarity form Trump and his trade advisers despite the reportedly optimism from Chinese sources last week. What it is really frustrating (if you are a bear) is the markets buy-the-rumours-and -"mute"- the-facts reaction. SP500, Crude remain stuck in a 8-days range. Gold, Yen and T-Notes bounces off key multi-weeks low. I remain convinced that most of what we have seen in the last couple of weeks - especially in fixed income space - is mainly technical and just a temporary correction needed after the extensive rally seen throughout this year.
With the FED still open to cut rates in the future, US and China poised to a long period of negotiations before reaching a meaningful agreement and Brexit still facing a long transition period, the fundamental environment we will have in 2020 will be probably very similar to 2019 in terms of macro risk, with probability a bigger focus on the assessment of global growth. For now, equities look completely detached from fundamental developments and unresponsive to risk factors but there is no fundamental change that would suggest a meaningful outflows of capital from quality assets such as gold and treasuries.
If you missed the morning briefing from the desk click HERE