Key developments were seen over the weekend break, after Donald Trump stated that he was willing to push back the threatened March 1st increase for goods being imported from China, ahead of a proposed summit with China’s President Xi where any deal could be finalised. Shares in China may have roared ahead on the news with the Shanghai index having added over 5% during the session but the response from Wall Street futures has been rather more muted. This adds weight to the idea that China stands to gain far more from the compromise which is being pushed through to avoid further damage to the US economy as Trump squares up to another election campaign.
Economic data for the day ahead is rather thin on the ground although US Wholesale Inventories for December may provide some further direction here. This figure could dip into negative territory and combined with slowing consumption could be taken as a negative forward looking assessment of the economy. It’s worth noting that few feel a resolution to the US-China trade spat will mark an end to the decline in global trade however – the damage has already been done there.
Ahead of the open we’re calling the DOW up 80 at 26112 and the S&P up 7 at 2800.
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In January the Fed needed to put the Taper Genie back in the bottle; now they need to convince the short end crew to back off repricing the Fed Funds strip