By Lorcan Roche Kelly
U.S.-China talks start with hopes for a mini-deal, the latest Trump revelations, and a last-ditch attempt to reach a Brexit deal. Here are some of the things people in markets are talking about today.
The White House is looking at rolling out a previously agreed currency pact with China as part of a first-phase deal that could see next week’s tariff increase suspended. The U.S. administration’s internal deliberations come as high-level Chinese negotiators led by Vice Premier Liu He arrive in Washington for talks today with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin. With neither side optimistic for a breakthrough, a partial deal leading to further discussions in the future seems likely to be the best outcome.
President Donald Trump’s performance in the Oval Office is coming under further scrutiny after it was revealed that he pressed then-Secretary of State Rex Tillerson to help persuade the Justice Department to drop a criminal case against a Turkish client of Rudy Giuliani in 2017. There may be some relief for the president from the Ukrainian leader’s rejection of any suggestions he was blackmailed by Trump in the now-infamous phone call between the two in July. Meanwhile, Turkey is rapidly becoming the center of attention with the president’s decision to stand American troops down continuing to draw criticism as the incursion begins.
The only thing that is moving on Brexit at the moment is the calendar towards the Oct. 31 exit date. There is a small chance that may change today when British Prime Minister Boris Johnson sits down with his Irish counterpart in an effort to find a compromise that could lead to a last-minute deal. Should those talks fail to find a breakthrough, then the most likely outcome will be the U.K. asking for an extension to the exit date, or a so-called hard Brexit at the end of the month. The country’s economy continues to limp along, with data this morning showing growth unexpectedly slipped in August, while remaining strong enough to probably avoid an immediate recession.
Overnight the MSCI Asia Pacific Index added 0.1%, while Japan’s Topix index closed broadly unchanged after a volatile session driven by contrasting reports on the prospects for today’s trade talks. In Europe, the Stoxx 600 Index was 0.3% lower at 5:45 a.m. Eastern Time with defensive stocks performing best. S&P 500 futures pointed to a slightly lower open, the 10-year Treasury yield was at 1.587% and gold was a little higher.
U.S. inflation data is published at 8:30 a.m., with the core reading expected to remain at 2.4% while the headline rate picks up to 1.8%. Weekly initial jobless claims are released at the same time. Minutes of the most recent European Central Bank meeting will be of some interest as the decision to restart QE seems to have been unusually contentious. The October WASDE crop report is published at 12:00 p.m, while Delta Air Lines Inc. reports earnings. Monetary officials speaking today: San Francisco Fed President Mary Daly, Federal Reserve Bank of Cleveland President Loretta J. Mester and Federal Reserve Bank of Atlanta President Raphael Bostic.