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Good morning. There has been progress in both U.S.-China trade talks and Brexit negotiations if all parties involved are to be believed, and Europe will be grappling with whether bad economic data means all that much. Here’s what’s moving markets. 

“Very Monumental”

The U.S. and China say progress has been made in their trade talks, with China now pushing for a quick conclusion and U.S. President Donald Trump hailing the prospects for a “very monumental” agreement that may still be a few weeks away. The next battle will be ensuring that both sides stick to what’s been agreed and studying whether the accord could spark WTO challenges. Every U.S. industry from tech to farming needs the deal to come soon to tackle the uncertainty plaguing businesses.

Second Referendum

There’s very little actual information on how the Brexit talks between the U.K. government and the opposition Labour Party are going, but the Conservatives said they have been “productive” and the battle is centering on whether a second referendum should remain an option. Lawmakers blocking no-deal  didn’t have much impact on the pound but the uncertainty the process brings by the ton has hammered the car industry. Angela Merkel also made another pledge to work her hardest to avoid a no-deal Brexit even after the move by MPs to block such an outcome.

The Importance of Data

German industrial production data is due to land on Friday but the question now vexing investors will be how much that actually matters. Factory orders were a big miss and German growth estimates were cut on Thursday, but the DAX stock index outperformed because the only thing that seems to matter there is China. Italy isn’t faring much better with its GDP growth outlook said to have been cut, but the FTSE MIB didn’t fall much from the bull market levels it reached a day prior. The European Central Bank is said to be considering  paying banks to make loans with the economic outlook so bleak.


The topic of the past few months has been central banks turning dovish and hitting the pause button on tightening monetary policy. But the debate is ongoing. That continued with the Federal Reserve’s Loretta Mester, who said she thinks it’s “possible” the rate-hiking cycle is over for now. But Fed officials pushed back on the rate-cut idea put forth by Donald Trump, who took to Twitter to describe the increases by the central bank as “ unnecessary and destructive.” Likely that’s the reason behind his attempt to add some more loyalist picks to the Fed.

Coming Up...

Asian stocks were mixed and European futures point to a similar open, while Treasury yields and U.S. futures bounced a little on the China-U.S. progress. Brent crude is flirting with $70 a barrel, having briefly touched that level on Thursday, and oil benchmarks are defying supply and demand rules. British people only love talking about the weather more than they do house prices, so the latest report from Halifax will be watched closely. The main event on the economic calendar, however, will be U.S. payrolls data in the afternoon.

What We’ve Been Reading

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

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