Five Things You Need to Know to Start Your Day
Senate leaders open new talks to resolve shutdown, China delegation to travel to U.S. ahead of trade talks and Theresa May’s finance minister hints he could walk out on her. Here are some of the things people in markets are talking about today.
After the failure of two opposing bills to gain sufficient support in the Senate to end the government shutdown, new negotiations between leaders on both sides of the aisle and the White House have begun, signalling the potential for a deal to end the impasse. President Donald Trump told reporters yesterday that while he wouldn’t be happy if a stopgap funding bill was passed without money for a border wall, he has “other alternatives” that he could use, a possible reference to declaring an emergency in order to allocate funding without Congressional approval. Hundreds of thousands of federal workers today will miss their second paycheck of the shutdown, with hedge fund billionaire Bill Ackman suggesting the same situation for Congress would lead to a rapid resolution of the standoff.
A group including Chinese deputy ministers will arrive in Washington on Monday to pave the way for the next round of trade talks between Vice Premier Liu He and U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin from Jan. 30 to 31. Commerce Secretary Wilbur Ross has downplayed expectations for a breakthrough, saying both sides were “miles and miles from getting a resolution,” while emphasizing China and the U.S. are keen to make a deal. The latest sign the trade war is hurting global growth came in German business confidence this morning, which dropped to a near three-year low.
U.K. Chancellor of the Exchequer Philip Hammond declined to rule quitting the government in protest if the U.K. plunges out of the European Union with no deal in the next nine weeks. The House of Commons is trying to prevent that from happening in a series of votes scheduled for Jan. 29, with pound traders bullish as they see the chances of a no-deal Brexit fading. Away from the politics, companies are still struggling to get contingency plans in place.
Overnight, the MSCI Asia Pacific Index rose 1.0 percent while Japan’s Topix index closed 0.9 percent higher as technology earnings boosted sentiment. In Europe, the Stoxx 600 Index was 0.7 percent higher at 5:50 a.m. Eastern Time, with few clear catalysts to explain the risk-on sentiment. S&P 500 futures also pointed to gains at the open, the 10-year Treasury yield was at 2.724 percent and gold was higher.
Today’s scheduled Durable Goods and New Home Sales numbers have fallen victim to the government shutdown. Which leaves the slate pretty clean, except for the Baker Hughes rig count which is due at 1:00 p.m., a number that oil investors will be closely watching as signs are pointing to an easing in the relentless growth in shale oil production. That is not to say production is falling, with output this year expected to exceed 11.95 million barrels a day in 2019 – 23 years ahead of schedule.
What we've been reading
This is what's caught our eye over the last 24 hours.
- Millions of simulations show Treasuries still a haven, HSBC says.
- Goldman and Morgan Stanley ask to cancel trades after $41 billion flash crash.
- China to join talks on $25 trillion e-commerce market at last minute.
- ECB presidential contenders play it cautious on rate-hike chance.
- German business sentiment falls to the lowest level in almost three years.
- We’ll always eat meat. But more of it won’t be “meat”.
- Big rise in atmospheric CO2 expected in 2019.
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