China casts doubt on offer to reduce trade deficit, Italian populists agree program for government, and Nafta deal remains elusive. Here are some of the things people in markets are talking about today.
What $200 billion?
China disputed reports this morning that it had offered to reduce its annual trade surplus with the U.S. by $200 billion, with a foreign ministry official saying he was unaware of any such concession. However, the country is adopting a conciliatory stance in talks in Washington, which continue today, announcing the end to an anti-dumping probe into U.S. sorghum imports. While economists expect President Donald Trump will follow through with his threat to impose some of the threatened tariffs on China, they consider the likely impact to be minimal.
Five Star movement leader Luigi Di Maio said his parliamentary group have reached a deal on a program for government with the anti-immigrant League, with only the thorny matter of who will be prime minister still outstanding. The details of the agreement signal a watering down of some highly controversial policy positions, with no mention of a euro-exit strategy and nothing on ECB debt write-offs. That hasn’t been enough to halt the selling of Italian government debt, with bank shares also trading lower in Milan this morning.
Not even close
Trump’s chief Nafta negotiator said that Mexico, the U.S. and Canada are “nowhere near close to a deal” to update the region’s free-trade pact. Pressure is on negotiators to resolve differences ahead of U.S. midterm elections, and Mexico’s presidential poll. The current bones of contention are perennial Nafta conflict points: the Canadian dairy market, regional car construction, and Trump’s demands to shrink the U.S. trade deficit. Negotiations will continue in Washington on Monday.
Overnight, the MSCI Asia Pacific Index rose 0.2 percent, while Japan’s Topix index closed 0.4 percent higher with gains led by energy and insurance companies. In Europe, the Stoxx 600 Index was 0.1 percent lower at 5:50 a.m. Eastern Time, with Italian stocks the stand-out underperformer as the benchmark gauge in Milan dropped more than 1 percent. S&P 500 futures pointed to a higher open, the 10-year Treasury yield was at 3.100 percent and gold was lower.
With oil having something of a banner week, today’s Baker Hughes rigcount will be watched to see if the recent run-up in activity to 2015 highs continues when the data are released at 1:00 p.m. Ahead of that, Dallas Fed President Robert Kaplan and Fed Governor Lael Brainard are both scheduled to speak at 9:15 a.m. in different locations. Earlier today, Federal Reserve Bank of Cleveland President Loretta Mester warned against dismantling core banking reforms. For the vexillophiles out there, there’s an event in the U.K. tomorrow that may be of interest.
What we've been reading
This is what's caught our eye over the last 24 hours
- A warning sign for global markets is flashing in Japan.
- Why global growth is speeding up, not slowing down.
- Three hedge fund managers face down Wall Street’s dollar doom.
- The world’s dominant crypto-mining company wants to own AI.
- Trade chokepoints are making it harder to feed the world.
- The U.S. army is turning to robot soldiers.
- Senate votes to save net neutrality, but hurdles remain.
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