Two days of low-level talks failed to yield any progress on the trade standoff between the world’s two largest economies. With Chinese officials raising the possibility of no further discussions with the U.S. before November’s mid-term elections, it seems likely that the tariff war between the countries is now primed to escalate further. Talks between the U.S. and Mexico on reviving Nafta seem set to continue into next week, with Mexican Economy Minister Ildefonso Guajardo saying both sides have yet to resolve all outstanding issues. Canada is set to remain on the sidelines until its southern partners iron out their differences.
Powell in Wyoming
Federal Reserve Chair Jerome Powell will give a speech on monetary policy in a changing economy at 10:00 a.m. Eastern Time as part of the Jackson Hole symposium in Wyoming. It will be Powell’s first speech to the conference since becoming head of the Fed, and his first since President Donald Trump’s latest criticism of the bank’s policies became public. Neither European Central Bank President Mario Draghi nor Bank of Japan Governor Haruhiko Kuroda are attending this year’s event.
New York State prosecutors are starting the process of opening criminal investigations into Trump’s former lawyer Michael Cohen, and possibly the president’s business, according to people familiar with the matter. Trump has no power to shut down a state investigation, nor pardon crimes charged by state prosecutors. In Washington, Senate Judiciary Chairman Chuck Grassley’s staff are in talks with Cohen’s attorney, Lanny Davis, as a preliminary step to deciding whether his committee will investigate Cohen’s claims about Trump. The president blasted the plea deal taken by his former lawyer and suggested that the practice of “flipping” low-level criminals to get them to testify against their bosses should be made illegal.
Oh so quiet
Overnight the MSCI Asia Pacific Index added 0.1 percent while Japan’s Topix index closed 0.7 percent higher as the yen headed for a fourth day of losses. In Europe, the Stoxx 600 Index was 0.1 percent by 5:45 a.m. as nothing much happened at all. S&P 500 futures pointed to a gain at the open, the 10-year Treasury yield was at 2.833 percent and gold was higher.
While Powell’s appearance at Jackson Hole is certainly the main event today, there are some data releases worth keeping an eye on. At 8:30 a.m. U.S. durable goods orders are expected to show a 1 percent drop in the headline number, with 0.5 percent growth once transportation is stripped out. Mexican second-quarter GDP is due at 9:00 a.m. Later we get the weekly look at the health of the U.S. shale industry when Baker Hughes publishes its rig count at 1:00 p.m.