Asia Stuck In Friday Tariff-Jam

Nov 08 03:11 2019 Print This Article

The schizophrenic nature of the financial markets of late was highlighted overnight as the mid-week gloom turned to glee overnight. The medication used in this case was an announcement by the Chinese Commerce Ministry that China and the US had agreed to a phased roll-back in tariffs as part of an impending interim trade deal. The noise coming from Washington DC was not quite so upbeat, with reports of conflicts amongst White House advisors on the merits of the plan.

Still, financial markets weren’t going to let reality get in the way of a good story. The dollar surged higher, Wall Street indices rose to record highs, and US 10-year treasury yields jumped ten bps, rising through the 1.90% market. Yields, in particular, with the long-end of the curves in major developing markets creeping higher over the last month. Yes, even German Bunds, highlighting the perils of going all-in buying negative-yielding bonds in the hope that they get even more negative. Enjoy the fruits of that trade chaps.

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