Five Things You Need to Know to Start Your Day

(Bloomberg) --

U.S. stocks extended their recent rally as investors shrugged off concerns about this week’s trade talks. Here are some of the things people in markets are talking about.

U.S. Said to Seek Stable Yuan 

The U.S. is asking China to keep the value of the yuan stable as part of trade negotiations between the world’s two largest economies, a move aimed at neutralizing any effort by Beijing to devalue its currency to counter American tariffs, people familiar with the ongoing talks said. Officials from the two countries are discussing how to address currency policy in a “Memorandum of Understanding” that would form the basis of a deal that ultimately will have to be approved by President Donald Trump and his Chinese counterpart Xi Jinping, according to several people involved in and briefed on the discussions. While the precise wording remains unresolved, a pledge of yuan stability has been discussed in multiple rounds of talks in recent months and both sides have tentatively agreed it will be part of the framework of any final deal. Negotiations resume Tuesday in Washington and are scheduled to continue through Friday as a March 1 deadline for higher U.S. tariffs approaches.

Stocks Edge Higher 

Asian shares look set for gains after U.S. stocks rose in thin trading. Walmart Inc.’s stellar earnings boosted consumer shares Tuesday, while Treasuries advanced as investors assessed the prospects for a trade deal with China. The S&P 500 gained for the sixth time in seven sessions, pushing to the highest since early December. Walmart’s best holiday quarter in a decade lifted retailers, and homebuilders got a boost from a positive sentiment report. The 10-year Treasury yield slid below 2.64 percent as concerns remain that the trade truce will end March 1 without a deal, leading to fresh tariffs. The dollar fell against major currencies ahead of speeches from Federal Reserve officials this week and the release of meeting minutes Wednesday that should shed more light on the central bank’s turn to a more dovish tone. China’s yuan traded offshore strengthened against the greenback.

Japan, Korea Trade Deals Unlikely Before Brexit

Business Secretary Greg Clark said the U.K. isn’t likely to reach agreements with Japan and South Korea to roll over existing trade deals before Britain’s scheduled departure from the European Union on March 29. Britain benefits from about 40 free-trade agreements with 70 nations through its EU membership, and it’s been seeking to extend them after Brexit. Combined, they account for 11 percent of U.K. trade. “Unfortunately not all of the FTAs -- and I might mention the Japan and Korean ones that are important -- are expected to be concluded in time,” Clark told executives and journalists on Tuesday at the annual conference of the MakeUK manufacturing lobby group. “That is one of the reasons why I think it is so important that we should not leave without a deal.”

Trump Says “No Rush” on North Korea

President Donald Trump said he is in “no rush whatsoever” to conclude a nuclear deal with North Korean leader Kim Jong Un. Trump told reporters at the White House Tuesday he is no rush because he has a strong relationship with the North Korean leader and U.S. sanctions against the country remain in place while they work to negotiate a deal to end Kim’s nuclear weapons and missile programs. Trump said that he spoke earlier in the day with South Korean President Moon Jae-In about his planned second summit with Kim scheduled for Feb. 27-28 in Hanoi. Trump said he discussed all aspects of the meeting with Moon. He added that he plans to hold a similar conversation Wednesday with Japanese Prime Minister Shinzo Abe.

Fed Shift Eases Asia Financial Conditions 

Financial conditions across Asia are getting easier, helped by a stock market rally, falling bond yields and a dovish policy shift from the Federal Reserve. The Bloomberg Asia ex-Japan Financial Conditions Index, which moves inversely to financial stress in money, bond and stock markets, is at its easiest in four months. Last year, the index showed conditions at the tightest since 2015 amid rising interest rates and corporate borrowing costs and slumping stock markets.  The shift is a relief for a region that accounts for more than 60 percent of the world’s economic output and has been weighed by ongoing uncertainty from the U.S.-China trade war. The Fed’s signal that its cycle of raising rates is on hold has given a green light to regional peers to do the same, with India even deciding to cut borrowing costs.

What we’ve been reading:

This is what caught our eye over the last 24 hours.

• Epic clash between bonds and stocks is coming back.
• Nestle’s taste of Japan is coming to Europe.
• The most mindnumbing of office tasks made one man $360 million.  
• Beware of buying young people’s blood to prevent aging.
• Karl Lagerfeld’s legacy is more than just Chanel suits.
• Walmart surges after reporting its best holiday quarter in years.
• The Japanese spice blend taking over America brings the heat.

To contact the editor responsible for this story: Boris Korby at bkorby1@bloomberg.net

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