By Lorcan Roche Kelly
Chinese authorities reacted to the Treasury Department’s currency manipulator tag by halting the decline of its currency overnight. The People’s Bank of China set the daily fixing stronger than analysts had expected, and rejected accusations that it manipulates the currency. The move served to ease the worst of the market selloff, with S&P 500 Index futures reversing losses of as much as 1.9% which happened in the wake of the Treasury announcement after U.S. markets closed yesterday. However none of this does anything to solve the wider trade issues between the two countries.
Flight to safety
The latest round of market mayhem saw another move toward less risky assets, which pushed the global stock of negative-yielding bonds to a record $15 trillion. Gold also rose, while the yen ralliedbefore giving back some of those gains in the wake of China’s yuan fix. Weirdly, sensible people with straight faces are now also talking about Bitcoin becoming a haven, along with other cryptocurrencies. With the original digital token gaining 17% in the last two days, they might well be on to something.
President Donald Trump imposed further sanctions on Venezuela, bringing U.S. relations with the country to the same footing as those it has with Iran and North Korea. National Security Adviser John Bolton will detail the new measures at a conference in Lima, Peru today which has been organized by that country’s government in order to find a way to restore democracy to Venezuela. The economic collapse there is almost complete, with not even U.S. dollar remittances enough to protect citizens from the ravages of hyperinflation.
Overnight the MSCI Asia Pacific Index slipped 0.8% while Japan’s Topix index closed 0.4% lower, ending the session well off its earlier lows. In Europe, the Stoxx 600 Index was 0.6% higher at 5:50 a.m. Eastern Time as China’s move helped to ease concerns over an immediate escalation of the trade war. S&P 500 futures pointed to a bounce at the open, the 10-year Treasury yield was at 1.760% and gold was flat.
It’s a relatively quiet day on the economic data front, with U.S. job openings data for June at 10:00 a.m. the only real number of note. St. Louis Fed President James Bullard is the sole central-bank speaker today. The big earnings number to watch will be from Walt Disney Co., while Hertz Global Holdings Inc., LendingClub Corp. and Papa John’s International Inc. also report.