Five Things You Need to Know to Start Your Day

(Bloomberg) --

U.S.-China trade negotiations make some progress, this month’s ECB meeting will be pivotal, and Italy sells off for a second day. Here are some of the things people in markets are talking about today.

Horse trading

China and the U.S. are continuing to try to knock together a trade deal ahead of a deadline later this month that would see the imposition of tariffs on Chinese imports to America should no accord be reached. Coal miners, farmers and oil-drillers would be the main beneficiaries of an offer by Beijing to boost purchases of U.S. goods by about $25 billion this year. On the American side, the Trump administration is putting the finishing touches on a deal which would allow ZTE Corp. to resume operations. Although the White House insists the ZTE agreement and trade talks are separate issues, China made easing the ZTE sanctions a pre-condition for engaging in the trade discussions. 

Live meeting

Next week’s European Central Bank monetary policy meeting in Riga, Latvia will discuss the timing of the end of the bank’s quantitative easing program, according to euro-area officials familiar with the matter. An assessment would have to be made on whether progress has been sufficient to warrant a gradual unwinding of asset purchases, ECB Chief Economist Peter Praet said this morning. Bundesbank President Jens Weidmann said that market expectations of an end to QE this year are plausible. The euro strengthened to trade at $1.1763 by 5:40 a.m. Eastern Time. 

Italian weakness

Markets have greeted the new Italian prime minister with little enthusiasm, as both that country’s bond and equities sold off again today. Italy’s 2-year bond yield rose 28 basis points to trade at 1.282 percent, while the main Milan benchmark equity gauge slid more than 1 percent. For now, markets seem to have decided that Italian risks will not spill over to a wider euro crisis. 

Markets rise 

Overnight, the MSCI Asia Pacific Index rose 0.4 percent, while Japan’s Topix index closed 0.2 percent higher, a fifth consecutive daily gain, spurred by the weaker yen. In Europe, the Stoxx 600 Index was 0.2 percent higher at 5:40 a.m, with Italian stocks the only major drag on the region. S&P 500 futures pointed to a gain at the open, the 10-year Treasury yield was at 2.948 percent and gold was lower.

Primaries 

At least 35 of the 92 women competing in the biggest primary night of election season won spots on the ballots for House or Senate races. In California, Lieutenant Governor Gavin Newsom and Republican businessman John Cox won the most votes in the gubernatorial primary meaning they will advance to November’s election. Senate incumbents saw their time for campaigning ahead of November’s vote cut short yesterday when Majority Leader Mitch McConnell canceled most of the chamber’s August recess to work through a legislative backlog. 

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