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Good morning. Theresa May lives to fight another two weeks, European policymakers are pleased with their guidance and there’s still much to do to end the trade war. Here’s what’s moving markets this morning.

May survives

U.K. Prime Minister Theresa May is clinging on against the predictions of her critics. She avoided further confrontation with her ministers on Wednesday evening by backing down and agreeing to allow Parliament the option of postponing Brexit rather than crashing out of the European Union without a deal. A muted opposition to this from the Brexiteer wing of her party indicates she could yet have a route to find compromise, but be assured, it’ll be a tense few weeks before a new plan is voted on, and in the meantime  business confidence is in the doldrums. Goldman Sachs, while acknowledging it’s a crowded trade, says bet on a higher pound.

Good guidance

Following a period when central bankers around the world were letting their dove flag fly, the mood appears to be stabilizing. European Central Bank Governing Council member Jens Weidmann said markets are adjusting their rate expectations right in line with the bank’s guidance, though Francois Villeroy de Galhau warned about keeping below-zero rates for too long. Federal Reserve Chairman Jerome Powell, meanwhile, answered questions about the “Powell Put” and said the central bank would pay attention to market volatility should it pose a threat to economic stability.

Get the goods

The U.S. is making it very clear that China agreeing to buy more goods will not be enough to get a trade deal done. U.S. Trade Representative Robert Lighthizer, testifying before the House Ways and Means Committee, said the push is for China to agree to significant structural changes and to find ways to ensure it keeps its promises. He  expressed some caution on getting a deal done regarding China's currency. Trade-sensitive assets are certainly not feeling the tension. Base metals, for example, are having their best start to a year since 2008.


The possibility of war between India and Pakistan has added a new risk to the global potpourri of problems investors have to keep in mind. The tension between the two nations is the worst since the 1971 war and it’s affecting commercial flights. Elsewhere, Muhammadu Buhari defied the skeptics and won the Nigerian election, though his main opponent is disputing the results. And the crumbling Venezuelan economy is claiming a new victim in ally Nicaragua, where the economy has slumped the most since the 1980s and its president is getting back to the negotiating table after months of protests.

Coming up...

U.S. President Donald Trump and North Korean leader Kim Jong Un’s  summit outcome is ahead, though the schedule has abruptly changed, leaving the talks in question. Trump may be distracted by the explosive testimony from his former fixer back at home. And it’s a bumper earnings day in Europe, with numbers already out from brewer Anheuser-Busch InBev NV and Swiss engineering conglomerate ABB Ltd. and more to come from Lucky Strike cigarettes owner British American Tobacco Plc and British Airways owner International Consolidated Airlines Group SA.

What We’ve Been Reading

This is what’s caught our eye over the past 24 hours.

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