6:39 a.m. The Dow Jones Industrial Average looks set for a lower open as tensions between the U.S. and China simmer and investors wait to hear from Federal Reserve Chair Jerome Powell on Wednesday.
When the U.S. and China agreed to resume negotiations last month, it buoyed the markets, but in no way did it indicate that the two nations were suddenly best of friends. And if we needed a reminder that the trade war was about more than trade, we got it today: China claimed that U.S. sales of weapons to Taiwan violates international law.
That comes as the market waits to hear Powell’s testimony on Wednesday, testimony which could reassure investors that the Fed does indeed plan to cut rates at the FOMC meeting at the end of July. “Market pricing still looks confidently for a 25bp cut at the end of the month but short-term positioning suggests a bias to look for a slightly less dovish take from Mr Powell,” writes Societe Generale’s Kit Juckes. “The debate isn’t about whether rates are cut once but about what happens later in the year.”
Write to Ben Levisohn at [email protected]