New Hope Regarding Upcoming U.S.-Sino Trade Talks

October 9, 2019

Trade talks between U.S. and Chinese officials resume tomorrow in Washington. Pessimism about their outcome had pummeled share prices on Tuesday, but the mood has improved because of reports that the Chinese seek some kind of partial accord.

Today is Yom Kippur, the holiest day of the Jewish calendar. Also, South Koreans are observing Hangeul Proclamation Day. Finance Ministers of countries using the euro are meeting today.

The dollar is slightly softer with overnight dips of 0.4% against the peso, 0.3% relative to the yuan, 0.2% versus the euro, kiwi and Australian dollar, and 0.1% vis-a-vis the loonie. The dollar has edged up, in contrast, by 0.3% relative to the yen and 0.1% versus the Swiss franc, and is trading unchanged against sterling.

Share prices had dropped in the Pacific Rim by 0.8% in Hong Kong and New Zealand, 1.2% in Taiwan, 0.7% in Singapore, and 0.6% in Japan but rose 1.7% in India and 0.4% in China. Equity markets in Europe have thus far risen 1.0% in Germany, 0.5% in France, 0.6% in the U.k and Italy, and 0.5% in Spain.

10-year sovereign debt yields are up three basis points in the U.K. and U.S. and by 2 bps in Germany.

The Bank of France did not change its previous third quarter French GDP growth forecasts, which anticipates a rise of 0.3%. While the central bank’s monthly manufacturing business sentiment index fell 3 points in September to a 2-month low, the indices for the services and construction sectors each improved an index point last month.

Consumer confidence in Australia according to Westpac’s monthly gauge slumped 5.4 points in October to a 51-month low. The 5-year and 12-month outlooks fell even more sharply. Australia is one of very few economies that did not experience a recession in 2008-9, but this figures suggest it may not be so fortunate in coming years.

Japanese machine tool orders were 35.5% fewer in September than a year earlier. That’s the fourth straight month and fifth time in six months to experience a drop of more than 30%.

The Saaci measure of business confidence in South Africa rose from a 34-year low in August to a 3-month high in September.

Indonesian retail sales dropped 2.1% on month and rose just 1.1% on year in August. That was the second smallest 12-month advance since January 2018.

Investors await release of the FOMC minutes later today as well as the JOLTS survey of U.S. job hires and separations and Brazilian and Mexican consumer price data.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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