China expresses confidence about US trade pact

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Published Date 12/5/2018

US stock indexes in the futures markets this morning were slightly better after yesterday’s huge selling. The dollar is pretty much unchanged today.

MBS prices yesterday ended unchanged from the morning pricing levels.

President Gearge H.W. Bush’s funeral takes place this morning; markets are closed but global markets are trading; currencies, metals and crude oil.

Fed President Jerome Powell’s scheduled testimony to the Joint Economic Committee on Congress has been canceled and so far not yet been re-scheduled.

China, after being closed-lipped since the weekend meeting between Presidents Trump and Xi, finally broke its silence and confirmed the 90-day deadline for tariff decisions. China expressed confidence on Wednesday that it can reach a trade deal with the United States, a sentiment echoed by President Donald Trump a day after he warned of more tariffs if the two sides could not resolve their differences. The president’s tweet this morning: “Very strong signals being sent by China once they returned home from their long trip, including stops, from Argentina. Not to sound naive or anything, but I believe President Xi meant every word of what he said at our long and hopefully historic meeting. ALL subjects discussed!”

MBA reported weekly that mortgage applications are up +2.0%, purchases were up by +1.0%, and refinances by +6.0%. Other scheduled data releases have been postponed until tomorrow.

China’s more promising response will likely put pressure on US interest rates after the strong improvement yesterday at the long end of the curve.

The 10 and 30 treasuries are technically overbought at yesterday’s levels. The softer tone from China should rally US stocks and likely push yields a little higher.

Source: TBWS

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