By Lorcan Roche Kelly
China tries to manage expectations ahead of trade talks, more whistle-blowers come forward, and Brexit pessimism increases. Here are some of the things people in markets are talking about today.
The world’s two largest economies are going into this week’s trade talks with very different views on what a possible resolution would look like. Vice Premier Liu He, who will lead the Chinese delegation in high-level discussions that begin on Thursday, said he would bring an offer that won’t include commitments on industrial policy or government subsidy reforms. Analysts say China sees the U.S. hand in negotiations weakened by both the effect of the trade war on U.S. manufacturing jobs and President Donald Trump’s impeachment fight. Speaking on Friday, the president said that any deal agreed would have to be “100% for us.”
The lead attorney representing the intelligence official at the center of the House impeachment investigation said that his firm is now representing “multiple whistle-blowers” in connection with the matter. President Trump responded to the revelation in his customary style, saying on Twitter that the “deep state” is “going to the bench” for reinforcements. While news on the investigation dominates politics in Washington, the White House said yesterday that the U.S. would not stop a Turkish advance into Northern Syria, a major policy shift which is seen as abandoning America’s wartime Kurdish allies in the country.
The seemingly never-ending Brexit saga continues to not end as talks between the U.K. and the European Union stall, with EU leaders asking for significant changes to Prime Minister Boris Johnson’s plan, while he continues to insist that Britain will leave the bloc on Oct. 31. With time running out to secure a deal or an extension, investors are looking for signs of weakness in the gilt market, while the Bank of England dusts off its crisis playbook.
Overnight the MSCI Asia Pacific Index was broadly unchanged, with Japan’s Topix index also flat. Chinese traders do not return from their week-long holiday until tomorrow. In Europe, the Stoxx 600 Index fluctuated between gains and losses, and was again trading mostly unchanged by 5:45 a.m. Eastern Time. S&P 500 futures were lower as investors weighed the latest trade comments from China, the 10-year Treasury yield was at 1.520% and gold edged down.
Yesterday, Federal Reserve Bank of Kansas City President Esther George, a confirmed hawk, said she would be prepared to support a further reduction in interest rates should she see evidence of a sharper economic slowdown. This morning we hear from Federal Reserve Bank of Minneapolis President Neel Kashkari, one of the most dovish U.S. central bank policymakers. The Supreme Court formally starts its new term today, and Nobel Prize season has kicked off with the award for medicine. There is very little in the way of hard economic data on the calendar, with only consumer credit due at 3:00 p.m.